Indian and American officials have postponed a three-day meeting scheduled for this week to discuss their interim trade deal, people aware of the matter said, describing a chain of events since Friday as likely to impact the March timeline New Delhi and Washington had agreed upon for an interim trade deal.
The US Supreme Court on Friday struck down President Donald Trump’s use of emergency powers to impose tariff rates of his choosing, forcing his administration to rely on other legal provisions. For now, the administration has used Section 122 of the Trade Act of 1974 but is legally vetting a separate provision, Section 338, that could overcome the 15% rate and 150-day deadline limits that apply.
This, the people said, indicates the US has not yet settled on a strategy since the court outlawed the last one — uncertainty that they said complicates negotiation. “Initially the US government said it could evoke Sections 232, 301, and 122 to counter its Supreme Court’s verdict. Now talks are on about 338. Any enduring pact between two sovereigns is not possible in such fluid situation, amid high-level of uncertainties,” one of them said, asking not to be named.
ALSO READ | Centre ‘will study’ US Supreme Court’s tariff ruling: Union minister Pralhad Joshi amid trade deal row
A second person confirmed that the departure of chief negotiator Darpan Jain, due for Sunday, has been postponed. “The two sides are of the view that the proposed visit of Indian chief negotiator and the team be scheduled after each side has had the time to evaluate the latest developments and its implications. The meeting will be rescheduled at a mutually convenient date,” the person said, asking not to be named.
The postponement clouds the broader negotiating calendar. The engagement in the coming week was meant for both to finalise the legal text of the interim bilateral trade agreement, ahead of an expected visit by US Trade Representative Jamieson Greer in March to sign the deal. All such meetings from both sides are now on hold, the people mentioned above said.
ALSO READ | Echoes of past distrust in US trade deal debate
The commerce ministry, in a statement issued Saturday, said it was studying the implications of the ruling and Trump’s subsequent moves. “We have noted the US Supreme Court judgement on tariffs yesterday. President Trump has also addressed a press conference in that regard. Some steps have been announced by the US Administration. We are studying all these developments for their implications,” it said.
The engagement scheduled for the rest of the month were linked to the joint statement both sides issued on February 6, when they announced they had agreed upon a framework for the talks and had March as the month when they would strike an interim agreement, before a larger bilateral trade agreement that Trump and Prime Minister Narendra Modi targeted when they met last year.
The new mechanisms, and rates, of the tariffs amount to what officials described as changes in key components. HT reported on Sunday that such changes may now require some realignment on both sides. The joint statement of Feb. 6 specifically provides for such adjustments: “In the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments.”
ALSO READ | SCOTUS quashes Trump tariffs: What happens to India, and India-US trade deal
US Treasury Secretary Scott Bessent on Sunday signalled Washington intended to press ahead with more changes to its tariff strategy through alternative legal routes. “The Court did not rule against this Administration’s tariffs. It only said IEEPA can’t be used to raise revenue. We will immediately shift to other proven authorities — Sections 232, 301, and 122 — to keep our tariff strategy strong,” he said in a post on X.
Reports have since indicated that Section 338 could also be used, allowing Trump to impose up to 50% tariff rates under the Tariff Act of 1930.
The dizzying pace of change since Friday has rattled exporters. Tariffs on Indian goods had soared to 50% before falling to 25% in early February, which a further drop to 18% committed by the Americans. Immediately after Friday’s ruling they plunged to 10%, only to be raised to 15% on Saturday — the maximum permitted under Section 122.
For India, the current 15% rate is still better than the 18% agreed in the bilateral framework announced this month, and well below the 26% Liberation Day rate. Emkay Global Financial Services, in an economic note, said the ruling was “a positive development for India,” adding that the US had “lost immediate tariff leverage as a means to agree to favorable trade deals globally.” Most countries would now renegotiate their trade deals with the US, analysts Madhavi Arora and Harshal Patel said.
In an update later on Sunday, they added: “India is also likely to take another look at its trade deal with the US, amid relaxed tariffs. India is prima facie free to resume purchases of Russian crude oil, but may not choose to do so, to keep good terms with Trump. Nevertheless, we think it is likely that the deal will be renegotiated with a view toward making it more equitable, with India under less pressure now to make large concessions.”
But the uncertainty cuts both ways. Section 122’s 150-day clock is running, and the administration has yet to settle on what comes after. Neal Katyal, the lawyer who successfully challenged the tariffs in court, said if the administration wanted sweeping tariffs it should go to Congress. “If his tariffs are such a good idea, he should have no problem persuading Congress. That’s what our Constitution requires,” he said.
This was a central point of the Supreme Court ruling, which held that sweeping tariff policy is in the domain of lawmakers – the US Congress – and cannot be delegated or assumed by the President.