India Must Reassess US Trade Deal After Tariff Ruling

The February 20, 2026 decision of the Supreme Court of the United States has abruptly reshaped the global trade landscape. By ruling that President Donald Trump lacked authority to impose sweeping “reciprocal tariffs” under the IEEPA, the court closed the fastest route for economy-wide tariffs and reasserted Congress’s control over trade policy. Within hours, the administration announced a temporary 10% global tariff under Section 122, highlighting both Washington’s determination to preserve trade leverage and the growing legal uncertainty surrounding U.S. tariff policy.

The ruling should prompt India to re-examine its trade deal with the United States. After offering concessions — including reducing MFN tariffs, aligning economic policies with US interests, easing regulations affecting US goods, and signalling large purchases of US products — India was to receive an 18% reciprocal tariff rate. Now, even without a trade deal, India, like other countries, faces a 10% tariff on most goods, rendering the agreement being negotiated useless.

The US-India Joint Statement dated Feb 6, 2026 mentions, “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”. Now US tariffs have changed, India should use this clause to either opt out or delay negotiations or seek fresh terms so the trade deal is equitable.

New Tariffs?
Even after the court blocked the emergency-powers route, a US president still has a few legal pathways to impose tariffs — though each is limited and harder to use.

Section 122 of the Trade Act of 1974 allows a president to impose temporary tariffs to address serious balance-of-payments deficits. It has never been used in the 50 years since it was enacted, and any tariffs imposed under it expire after 150 days unless Congress extends them. The provision was designed for the era of fixed exchange rates, when countries faced currency crises and external payment shortages. Since the world moved away from that system in the 1970s, the law applies only in the event of a major international payments crisis — a condition the United States does not face today — placing the proposed 10% tariff announced on February 20, 2026 on uncertain legal footing.

Section 338 of the Tariff Act of 1930 permits retaliatory tariffs if foreign countries discriminate against U.S. exports, but it requires strong proof and has never been used in modern practice.

More familiar tools remain available but are narrower and slower.

Section 232 of the Trade Expansion Act of 1962 allows import restrictions on national security grounds (recently used for steel and aluminum), while Section 301 of the Trade Act of 1974 targets unfair trade practices but requires lengthy investigations before tariffs can be imposed.

Bottom line: sweeping tariffs are harder to impose now. Legal options exist, but they are slower, more limited, and vulnerable to legal challenge.

Taken together, the ruling and the temporary tariff response inject significant uncertainty into global trade relations and ongoing negotiations. Countries that made concessions to avoid higher US tariffs may now reassess the value of those agreements, while the legal fragility and short duration of the 10% tariff complicate business planning and diplomatic strategy. For India, the decision narrows the expected benefits of its pending trade arrangement and underscores the need to recalibrate negotiating positions. More broadly, the episode signals that future US tariff actions will face tighter legal scrutiny, making US trade policy less predictable but more anchored in congressional oversight.