US is building a new tariff architecture: Why India plans to wait and watch, Pg11

Key Highlights:

• The US Supreme Court scrapped the International Emergency Economic Powers Act (IEEPA) tariffs last month.
• The Trump administration imposed 10% global tariffs under Section 122 for five months.
• The United States Trade Representative (USTR) is developing a new tariff structure based on Section 301 investigations.
• Malaysia has declared its trade deal with the US null and void following the IEEPA ruling.
• The USTR investigation cites India's "structural excess capacity and production" in certain sectors.
• In 2025, India had a bilateral trade surplus with the US of $58 billion.

Detailed Insights:

• The new US tariff structure could serve as the legal basis for its trade agreements, including the India-US deal.
• Following the IEEPA ruling, countries like the EU, Japan, and India are reassessing their trade deals with the US.
• Section 301 investigations could allow the US to impose differential tariffs, potentially impacting countries with existing trade arrangements.
• The USTR's goal is to replace Section 122 tariffs with new measures by July, using Section 301 for a stronger legal basis.
• The European Commission seeks clarity on the US's next steps after the IEEPA ruling, questioning the fairness of transatlantic trade.
• The fast-track nature of the Section 301 investigation means that the USTR will have new legal powers to impose differential tariffs on countries by May.
• The USTR investigation has said that India has “structural excess capacity and production”.

Key Concepts Involved:

• Tariff: A tax or duty imposed on goods when they are moved across a customs border.
• Section 301 Investigation: A tool used by the US to investigate and address unfair trade practices by other countries.
• Bilateral Trade Surplus: When a country exports more goods and services to another country than it imports from that country.