Last month, the United States and India signed a joint statement outlining a trade deal under which Washington was expected to cut reciprocal tariffs on Indian goods from 25 per cent to 18 per cent within about two weeks, while India was to submit a detailed, product-wise concession list by mid-March. Before that could happen, the US Supreme Court struck down the legal basis for those tariffs, eliminating the leverage Washington had used to secure concessions. This signalled the onset of CALM — collapse of America’s leverage mechanism.

Seeking an immediate alternative, within hours of the ruling the Trump administration imposed a uniform 10 per cent tariff under Section 122 of the Trade Act of 1974, replacing targeted pressure with a flat duty applied equally to all trading partners. With the tariff threat gone, the incentive behind America’s recent and ongoing trade deals has largely disappeared, leaving many countries to question the value of agreements meant to avoid duties that no longer exist.

Over the past year, Washington used the threat of steep “reciprocal tariffs” to push trading partners into rapid agreements, securing market access, procurement commitments and strategic alignment in exchange for lower duties. Negotiated rates were about 15 per cent for the European Union, Japan and South Korea; 20 per cent for Vietnam and Taiwan; 19 per cent for Indonesia, Thailand and the Philippines.

The Supreme Court ruling and the new 10 per cent tariff create a threefold dilemma for US trading partners, including India. The rate is lower than most negotiated levels, the uniform levy wipes out any competitive advantage those concessions were meant to secure, and there is little reason to offer tariff cuts, investment pledges or procurement........

© Indian Express