Trump’s tariff gamble on India: How he quietly bent the rulebook to keep duties on Delhi afloat

US President Donald Trump - File Photo

When Donald Trump first announced tariffs on Indian imports in April 2025, his administration claimed it was acting under the International Emergency Economic Powers Act (IEEPA) of 1977. The law was designed after Watergate to give presidents sweeping powers during national emergencies, usually to sanction hostile states or freeze foreign assets. What it never mentioned was tariffs.

Attorneys quickly noted that no president had ever interpreted IEEPA this way. A federal appeals panel shared the scepticism. “IEEPA doesn’t even mention the word ‘tariffs’ anywhere,” Circuit Judge Jimmie Reyna said during an August 4 hearing. Trump’s own lawyer, Brett Shumate, admitted “no president has ever read IEEPA this way” but still claimed it was lawful.

The Liberty Justice Center, a non-partisan advocacy group, sued in a New York court just days after the baseline 10 per cent tariffs took effect. They argued Trump had simply exceeded his authority.

Silent shift to older trade laws

As the case gained traction, Trump’s team began quietly backtracking. By August, when duties on Indian goods spiked to 50 per cent, the White House quietly invoked three older laws alongside IEEPA: Section 232 of the Trade Expansion Act of 1962, Section 301 of the Trade Act of 1974, and Section 604 of the same Act.

These statutes actually mention tariffs, unlike IEEPA. But the timing of their sudden appearance exposed the fragility of Trump’s legal footing. Analysts called it a “strategic retreat,” meant to strengthen his defence while maintaining the illusion of consistency. Instead, it only reinforced the impression that the administration had been scrambling to justify itself.

Heavy costs for India

India has been hit the hardest. The escalating duties now cover textiles, gems, jewellery, seafood and leather, nearly 55 per cent of Indian exports to the US. Exporters estimate $87 billion worth of trade could be damaged, giving an edge to rivals like China, Vietnam and Bangladesh.

The Ministry of External Affairs has termed the tariffs as “unfair, unjustified, and unreasonable.” Prime Minister Narendra Modi, addressing people in Ahmedabad, asked them to prioritise swadeshi goods, while the MEA warned India would safeguard its national interests.

The tariffs arrived even as India and the US were negotiating a trade deal and cooperating in the Quad alongside Japan and Australia. Trump’s punitive moves have instead fuelled mistrust and eroded goodwill at a critical strategic moment.

Trump’s threats of “great depression”

Trump has tried to frame the court fight in apocalyptic terms. On Truth Social, he declared that if judges strike down his tariffs, “It would be 1929 all over again, a Great Depression!” The claim has been ridiculed by economists but reflects his awareness that as much as $50 billion in projected revenue is at risk.

Legal observers say the case, which Trump has dubbed “America’s Big Case,” is likely headed to the Supreme Court. If the tariffs are ruled illegal, importers could seek refunds, though the process would take years.

India may not see relief soon

Economists warn that even if Trump loses, India may not benefit quickly. “The legal process may take a long time, and by then much of the economic impact will already be felt,” said economist Ajit Ranade, as quoted by India Today.

“Even if the tariffs are eventually ruled illegal, I don’t think there’s any provision for penalty payments or compensation. The costs borne and the investments made during this period are unlikely to be reversed, or may take too long.”

Corporate advisor Srinath Sridharan added, “Any institutional offsetting of the Trump tariffs may only temporarily ease trade tensions, but deeper strategic and political disruptions in US-India relations will likely persist. The trust has been destroyed.”