India Sets Conditions for US Trade Deal After Supreme Court Strikes Down IEEPA Tariffs

India has set a clear condition before signing a bilateral trade deal with the United States: the US must first create a new tariff framework that safeguards India's comparative advantage. This stance comes after the US Supreme Court struck down the legal basis for the sweeping tariffs that had underpinned the trade framework agreed between the two countries earlier this year.

What the Supreme Court Ruled

The US Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unconstitutional, effectively dismantling the tariff architecture that the Trump administration had used to launch a global trade reset. The ruling sent shockwaves through international trade negotiations, with several countries — including Malaysia, which declared its deal "null and void," and the European Union, which put its deal "on hold" — stepping back from previously announced agreements.

India's Position: Wait for New Architecture

India is notably not in the group of countries that signed final trade agreements. While a framework was announced between India and the US, India had not signed the legal agreement when the IEEPA tariffs were declared illegal. Indian officials have now clarified that any future deal must address three key dimensions:

• Section 301 tariffs — The US has launched two investigations against India: one on structural excess capacity and another on forced labour practices
• Section 232 tariffs — Tariffs on steel, aluminium, and other strategic goods
• Non-tariff barriers — Regulatory and procedural barriers to Indian exports in the US market

Trade Surplus and Existing Tariff Situation

India ran a $58 billion bilateral trade surplus with the United States in 2025, making it one of Washington's key trade partners. Currently, a 10% tariff under Section 122 of the Trade Act of 1974 applies to Indian goods — a measure that has been in place for around five months. Separately, the 25% ad-valorem tariffs that were linked to purchases of Russian oil were removed on February 7.

What Comes Next

India will not rush into signing any agreement simply to show diplomatic progress. The government has made clear it will wait for the US to establish a legally stable and comprehensive new tariff structure before entering into binding commitments. With several major US trade partners now reassessing their deals following the IEEPA ruling, India's cautious approach may prove prudent — avoiding commitments made under a legal framework that no longer exists.