After the U.S. Supreme Court struck down President Donald Trump's unilaterally imposed punitive tariff policy, major countries negotiating trade deals with the United States simultaneously began tallying gains and losses. The Indian government immediately postponed a planned trip to Washington this week and shifted to a wait-and-see stance.
South Korea, Japan, and Taiwan, which had pledged astronomical U.S.-bound investments to avoid high tariffs, are clearly moving to revisit existing agreements. The rush to seal trade deals under fierce pressure from the Trump administration has fueled concerns that those agreements could instead shackle their own economies. There is also a belated sense that it would have been better to take more time with the trade talks.
According to the Hindustan Times and other Indian outlets on the 22nd (local time), India had planned to send chief negotiator Darpan Jain and a delegation to the United States to finalize an interim trade agreement between the two countries. The plan was to meet with Jamieson Greer, an ambassador at the Office of the United States Trade Representative, to discuss lowering the mutual tariff from the existing 25% to 18%. Earlier this month, India drew up an interim agreement with the United States covering related matters and took a proactive approach to the talks.
But the situation changed completely when President Trump, immediately after the Supreme Court ruling on the 20th, abruptly invoked Section 122 of the Trade Act of 1974. After announcing a blanket 10% tariff on imports worldwide, Trump raised it to 15% within hours. India then postponed the meeting to a mutually convenient date, saying it needed time to properly assess the recent developments and their ripple effects.
Trade experts said the previous negotiating framework India had with the United States has effectively lost its meaning. Under the current situation, India would face an additional 15% tariff on top of the base most-favored-nation rate of 2% to 3%. Ajay Srivastava, founder of the Global Trade Research Initiative and former chief negotiator for India, said in a CNBC interview, "The interim trade agreement is now gone, and both sides need to rethink their strategies." A joint statement the two countries released on the 6th includes a clause that says if one country changes the agreed tariff, the other country can also revise its commitments. Major Indian media cited this point to say the Indian government has ample grounds to overhaul its trade strategy.
With the Supreme Court ruling shaking Trump's grip on trade talks, where tariffs had been wielded as a weapon, some say countries that did not rush to a deal or hastily pledge huge sums have gained the upper hand. South Korea and Japan, where the share of exports to the United States is high, hurried to agree to lower tariff rates to protect their export-driven industries. In the process, they pledged astronomical investments in the United States. Beyond investment, they also offered to align with U.S. policies on sanctions, national security, and critical mineral supply routes. They faced political criticism at home for giving up too much.
Japan was first to enter talks with the United States and, after eight rounds of meetings, pledged to finance $550 billion for projects in the United States in return for lowering tariffs on automobiles and auto parts from 27.5% to 15%. On the 17th, it also released an additional $36 billion investment plan. Japanese media said that "the government will carry out the initial $550 billion investment pledge," but added that "it is unclear whether the next financing announcement slated for March will proceed as planned."
South Korea likewise pledged $350 billion in investments and agreed to lower mutual tariff rates to 15% to avoid harsh tariffs imposed on aluminum, steel, and automobiles. The South Korean government is currently showing caution about outright denying the agreement itself, saying it will create an investment fund through new legislation. Taiwan concluded a trade agreement pledging $250 billion in investments but has not presented clear major follow-up measures.
Paul Nadeau, a visiting fellow at the Center for Strategic and International Studies, said in a New York Times (NYT) interview that the Supreme Court ruling could fundamentally change the dynamics of future trade negotiations. "The elements Trump could use as leverage in negotiations have been greatly weakened," Nadeau said, adding, "Governments of major countries are refraining from hasty moves, watching for policy shifts by the Trump administration, and focusing on crafting new trade strategies."