The US Court of International Trade has ruled against President Donald Trump’s 10 per cent global tariff imposed on all trade partners, including India.

The move, which will bring down import levies in the US to the basic MFN level, is expected to strengthen India’s hand in the ongoing negotiations for a free trade agreement with the US, a source tracking the negotiations told businessline.

A three-judge panel of the specialised federal court in New York delivered a 2-1 ruling on Thursday against Trump’s February 20 announcement of a 10 per cent global tariff under Section 122 of a 1974 trade law.

The court said that the tariffs were unlawful as it could be imposed only if there were large and serious balance of payment problems and not just a trade deficit. These tariffs were imposed for 150 days.

“India continues to be engaged with the US on a bilateral trade agreement, the framework for which has already been agreed upon. But it has been delaying finalising commitments on tariff cuts as the tariff situation is still evolving after the US Supreme Court struck down reciprocal tariffs earlier this year. The new development on the global tariff has further strengthened India’s hand in the negotiations,” the source close to the negotiations said.

Both the reciprocal tariffs (fixed at 25 per cent for India) imposed under IEEPA and the later 10 per cent Section 122 tariffs were on legally weak footing, which is why courts struck them down, pointed out Ajay Srivastava from the Global Trade and Research Initiative.

However, the ongoing Section 301 investigations, against India and some other countries, launched by the USTR in March 2026 continue to be worrying for New Delhi as it could trigger significant trade penalties.

But India has been putting up a strong defence in both the ongoing probes in Washington—one into structural excess capacity in manufacturing and another into the failure to enforce forced labour import bans.

“The US administration has effectively been playing a cat-and-mouse game,  using one legal provision to impose broad tariffs, and when courts block it, shifting to another questionable legal tool. Such uncertain tariff regime in world’s largest market creates uncertainty for businesses, disrupt global supply chains, and raise costs for manufacturers and consumers,” Srivastava noted.

India should wait until the US develops a more stable and legally reliable trade system before concluding the bilateral trade agreement. “The continuing uncertainty around U.S. tariff policy, with major Trump-era tariffs repeatedly struck down by courts, makes any long-term trade commitments by India difficult to justify,” he said.

Per the preliminary India-US interim bilateral trade deal framework announced on February 2, India had agreed to eliminate or lower tariffs on most industrial goods and agricultural products, while the US agreed to lower reciprocal tariffs to 18 per cent from 25 per cent.

“No trade deal was signed between India and the US so the framework has no legal tenability.  India is well within its rights for a re-think based on new tariff realities,” the source said.

At present, the US is also not prepared to reduce its standard MFN tariffs (the normal uniform tariff imposed by countries equally on all trade partners who are WTO members), while expecting India to lower or eliminate its MFN duties across most sectors, Srivastava noted.

Under such conditions, any trade deal risks becoming one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return, he added.

India’s goods exports to the US in 2025 were estimated at $103.85 billion posting a 18.9 per cent increase over the previous year, per USTR figures. Its imports from the US in 2025 posted an increase of 9.8 per cent to $45.6 billion.

Published on May 8, 2026