US Court Ruling: ‘Reject Any Agreement Influenced by Coercion’ Says Legal Expert
India and the United States are on the verge of finalizing the initial phase of a significant Bilateral Trade Agreement (BTA) before July. However, recent developments regarding U.S. tariffs have prompted caution from trade experts. A U.S. trade court recently invalidated tariffs imposed by former President Donald Trump, raising questions about the legal foundation of such trade measures. The Global Trade Research Initiative (GTRI) has urged India to carefully reconsider its approach to ongoing Free Trade Agreement (FTA) negotiations with the U.S. in light of this ruling.
Implications of the U.S. Court Ruling
On May 28, a federal court in Manhattan ruled that the tariffs imposed by Trump on U.S. trading partners were invalid. The court clarified that such tariff actions require Congressional approval rather than being enacted through presidential emergency powers. This landmark decision has significant implications for international trade, particularly for countries like India that are negotiating trade agreements with the U.S. The ruling emphasized that tariffs enacted under emergency economic authority lack legal validity, which could affect the dynamics of future trade negotiations.
Ajay Srivastava, founder of the GTRI, highlighted the importance of this ruling for India. He advised that India should not enter into any trade arrangements that are influenced by threats or based on illegal measures. The GTRI’s stance is that the tariffs imposed during Trump’s administration violate both World Trade Organization (WTO) regulations and U.S. domestic laws, as confirmed by the court’s decision. This situation presents a unique opportunity for India to reassess its negotiation strategy before committing to any agreements that may disproportionately favor U.S. interests.
India’s Trade Relationship with the U.S.
Despite the recent legal challenges surrounding U.S. tariffs, India and the United States have maintained a robust trading relationship. The U.S. has been India’s largest trading partner for four consecutive years, with bilateral trade reaching approximately USD 131.84 billion in 2024-25. During this period, India recorded a goods trade surplus of USD 41.18 billion with the U.S., indicating a favorable balance for India.
The anticipated Bilateral Trade Agreement is expected to further strengthen this economic partnership, creating new opportunities for trade and investment collaboration. As both nations work towards finalizing the initial phase of the BTA, the focus will likely be on addressing key issues that could enhance mutual benefits and foster a more balanced trade relationship.
Market Reactions and Future Prospects
Following the U.S. federal court’s ruling, global stock markets reacted positively, particularly in major Asian markets. Notably, Japan’s Nikkei and Korea’s Kospi indices saw increases of around two percent in the aftermath of the decision. This favorable market response reflects investor optimism regarding potential changes in trade policies and the implications for international trade dynamics.
As India prepares to finalize the BTA with the U.S., it faces the challenge of navigating a complex trade landscape influenced by legal uncertainties surrounding tariffs. The GTRI’s cautionary advice serves as a reminder for India to prioritize its interests and ensure that any trade agreements are founded on fair and legal grounds. The coming months will be crucial as both countries work to solidify their economic partnership while addressing the implications of recent legal developments.
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