US-India Trade Pact Stalls as SCOTUS Ruling Upends Trump Tariff Strategy

The sudden suspension of trade negotiations between New Delhi and Washington marks a critical inflection point for global retail and e-commerce sectors that have increasingly looked to India as a primary alternative to Chinese manufacturing. The postponement of the high-level meeting, originally scheduled for February 23 in Washington D.C., was triggered by a constitutional clash in the United States. The U.S. Supreme Court recently ruled that the authority to impose tariffs resides with Congress rather than the Executive Branch, effectively striking down the legal foundation of several of President Donald Trump’s trade policies. This judicial 'jolt' has forced both nations to retreat and re-evaluate the legal viability of an interim pact that was expected to be signed as early as March.

For the e-commerce and retail industry, the immediate fallout is characterized by heightened volatility and cost pressure. In a defiant response to the Supreme Court's ruling, President Trump announced a 10% tariff on all imports, which was rapidly escalated to 15% just 24 hours later. These duties, effective February 24 for a 150-day window, hit Indian exports—ranging from textiles and jewelry to electronics—at a time when retailers were banking on a reduction in trade barriers. The 'interim' nature of the proposed deal was intended to provide a quick win for both administrations, focusing on market access for U.S. agricultural products and medical devices in exchange for the restoration of India’s Generalized System of Preferences (GSP) status. Now, that roadmap is in jeopardy.

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In a defiant response to the Supreme Court's ruling, President Trump announced a 10% tariff on all imports, which was rapidly escalated to 15% just 24 hours later.

Industry analysts suggest that the 15% tariff hike will likely be passed on to U.S. consumers, particularly in the apparel and home goods sectors where India holds significant market share. Furthermore, the legal uncertainty surrounding who has the final word on U.S. trade policy—the President or Congress—makes it nearly impossible for Indian negotiators, led by Joint Secretary Darpan Jain, to finalize a 'legal text' that can withstand future judicial or legislative challenges. The Indian Commerce Ministry, under Piyush Goyal, is now facing domestic political heat as well. The opposition Congress party has seized on the development, labeling the proposed deal a 'surrender' of national interests and demanding a total renegotiation in light of the shifting U.S. legal landscape.

The broader implication for the 'China Plus One' strategy is profound. Many U.S.-based retailers have spent the last three years diversifying their sourcing toward India to mitigate risks associated with U.S.-China tensions. This latest trade friction introduces a new layer of 'U.S.-centric' risk, where domestic American legal battles dictate the cost of goods sold on platforms like Amazon and Walmart-owned Flipkart. If the 150-day tariff period holds, it could disrupt the crucial back-to-school and early holiday inventory planning cycles for major retailers.

Looking ahead, the rescheduling of these talks will depend on how quickly the Trump administration can coordinate with Congress to establish a new legal framework for trade enforcement. Until then, the retail sector must brace for a period of 'tariff-by-tweet' and judicial counter-moves. Investors and supply chain managers should watch for any signals from the U.S. Congress regarding a legislative fix for the tariff authority, as this will be the only way to provide the long-term certainty required for a comprehensive bilateral trade agreement. For now, the 'interim' deal remains in cold storage, leaving billions of dollars in cross-border trade hanging in the balance.