India-US Trade Deal Delayed Amid US Tariff Uncertainty and New Probes

The signing of a bilateral trade agreement between India and the United States has been put on hold, as confirmed by India's Commerce Secretary, Rajesh Agrawal, on Monday, March 16, 2026. The Indian government is awaiting the establishment of a clear and stable new global tariff framework by the US before proceeding with the deal. This development comes in the wake of significant shifts in US trade policy under the Donald Trump administration. A crucial factor behind the delay is a recent ruling by the US Supreme Court that invalidated the reciprocal tariffs previously imposed by President Trump under the 1977 International Emergency Economic Powers Act (IEEPA). This ruling, which occurred in late February 2026, specifically rescinded tariffs such as the 25% duty on Indian imports linked to Russian oil purchases, and other retaliatory tariffs that had been in place. Following the Supreme Court's decision, President Trump swiftly announced a new, temporary universal tariff of 10% on imports from all countries, which was subsequently raised to 15%. This new tariff was imposed under a different statutory authority, Section 122 of the Trade Act, and is expected to remain in effect for 150 days, until July 24, 2026. The uncertainty surrounding the long-term tariff structure and whether these new rates will apply to India once negotiations resume is a primary concern for New Delhi. Further complicating the trade landscape, the Trump administration has launched fresh investigations into 'unfair trade practices' and 'structural excess capacity' in manufacturing sectors across approximately 60 trading partners, including India. These probes, initiated under Section 301 of the Trade Act of 1974 and Section 232 of the 1962 Trade Expansion Act, could potentially lead to the imposition of additional tariffs. Indian officials are closely examining the legal implications of these investigations. Earlier, in early February 2026, India and the US had reached a preliminary understanding for an 'interim' or 'mini' trade agreement. Under this proposed framework, the US had agreed to reduce tariffs on various Indian goods from 25% to 18%, including the waiver of the additional 25% tariff related to India's Russian oil purchases. In exchange, India was expected to commit to lowering import duties on specific American goods and significantly increasing its purchases of US products, with a pledge to buy $500 billion worth of American items over five years. However, the recent developments have cast a shadow over this previously agreed-upon framework, leading India to adopt a 'wait and watch' approach. The Indian government's stance is that it is not in a hurry to sign any deal until the US clarifies its global tariff architecture. Some Indian officials view the new US investigations as a 'pressure tactic' to compel countries to finalize trade deals following the disruption caused by the Supreme Court ruling. The US, for its part, expects India to honor the commitments made during the earlier understanding, highlighting the mutually beneficial nature of the arrangement. This delay impacts not only the specific trade agreement under negotiation but also broader bilateral economic relations. The United States remains India's top export destination, making a stable and predictable trade environment crucial for India's economic interests. The ongoing uncertainty underscores the complex and evolving nature of global trade dynamics and the significant impact of domestic legal and political developments in major economies like the US on international trade partnerships. India is also currently negotiating six other Free Trade Agreements (FTAs) with various countries and regional groupings to diversify its trade partnerships.

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