Which tariff of Trump got stopped by the court, which ones will remain in force, what will be the impact on India? Here is the complete detail

Court has banned Trump’s reciprocal tariff- Photo-AP

A US court has put a stay on Trump’s reciprocal tariff plan. The court has said that by imposing widespread tariffs on almost all countries of the world, Trump has exceeded the limits of emergency powers granted to the President. Trump has also appealed against the court’s decision.

US President Donald Trump’s economic policies have suffered a major setback. A New York-based federal court on Wednesday put a stay on Trump’s decision to impose extensive tariffs on almost every country in the world. A panel of three judges of the US Court of International Trade said in its decision that the emergency powers of the International Emergency Economic Powers Act (IEEPA) law of 1977 do not give the President the right to impose tariffs on almost every country.

The court said that the US Constitution gives Parliament the exclusive right to manage trade with other countries and this right is not affected by the President’s emergency powers to protect the US economy.

On April 2, Trump announced reciprocal tariffs on almost every country in the world, meaning that whatever tariff a country imposes on American goods, America will also impose the same tariff on the goods of those countries.

Trump, however, put a 90-day stay on tariffs imposed on all countries except China, Canada and Mexico. Except for these three countries, a base tariff of 10% remained applicable on all other countries and other tariffs were stopped.

In view of the trade deficit, Trump had announced reciprocal tariffs on countries around the world, which had a maximum tariff of 50% and a minimum of 10%. Trump’s tariff announcement created huge uncertainty in global trade and the financial market was also shaken, which has not recovered properly till now. This has created fear of inflation and recession all over the world. Under these circumstances, the court has overturned Trump’s tariff.

The court did not stop these tariffs

The court, however, has not stopped the tariffs imposed by the Trump administration on steel, aluminum and autos. The Trump administration had imposed a tariff of 25% on steel and 10% on aluminum in its first term and when it came back to power, it again imposed these tariffs.

However, this time the tariff on aluminum has also been increased to 25%. A 25% tariff has also been imposed on automobiles. All these three tariffs have been imposed with the US.

However, this time the tariff on aluminum has also been increased to 25%. A 25% tariff has also been imposed on automobiles. All these three tariffs have been imposed on every country doing trade with the US and will continue in the future as well because the court has not stopped them.

What will happen to Trump’s reciprocal tariffs now?

Trump had imposed reciprocal tariffs in April under his emergency powers using the IEEPA law. He claimed that a national emergency situation has arisen because of the trade imbalance. In February, he used the IEEPA law to justify the tariffs imposed on Canada, Mexico and China.
He said that Canada and Mexico have failed to stop illegal refugees and drug smuggling from their borders with the US and that drugs are also reaching the US illegally through China.
The US constitution gives the power to fix tariffs to the parliament and all the MPs, irrespective of their party, decide together how much tariff will be imposed on a country. Trump used his emergency powers to unilaterally impose tariffs which were beyond his jurisdiction.

What does the Trump administration say about the tariffs?

Minutes after the court’s decision, the Trump administration filed an appeal against it. Regarding the tariffs, the administration argued that in 1970, President Richard Nixon had also used similar emergency powers.

But the court rejected the comparison with the Trump administration and said that Trump’s tariffs are very broad and do not address the issues for which they are being planned.

Trump got a big shock from the court’s decision

Wendy Cutler, former US trade negotiator and vice president of the Asia Society Policy Institute, while talking to news agency AP, said that the court’s decision has caused a huge reversal in the President’s trade policy.

Cutler said, ‘Many countries were negotiating with Trump and offering concessions regarding the 90-day ban on tariffs. But now after the court’s decision, they can stop all kinds of concessions to America.’

The Trump administration has appealed against the court’s decision and it is believed that this matter can go to the Supreme Court. Ishwar Prasad, a professor of trade policy at Cornell University, said that this decision weakens the foundation on which Trump imposed tariffs using emergency powers.

Ishwar Prasad said, ‘The decision makes it clear that the comprehensive tariffs announced by Trump unilaterally are an encroachment of executive powers.’

What will be the impact on India?

On April 2, Trump imposed reciprocal tariffs on almost every country in the world, which was the highest tariff of America since 1930. Under the reciprocal tariff scheme, America imposed a 26% tariff on India. But on April 9, the Trump administration put a 90-day ban on the implementation of tariffs. However, a base tariff of 10 percent remained applicable on all countries with reciprocal tariffs.

The 10 percent base tariff on countries around the world and the 30% tariff on China is affecting global economic growth. Credit rating firm Moody’s had said some time back that due to this India’s GDP growth could decline from 6.7% to 6.3% in 2025.

Along with this Moody’s had said that even though there is a threat from change in US policies, but India’s economic growth is dependent on its domestic consumption. Government spending on infrastructure contributes to GDP growth. If the government also cuts taxes, then people are encouraged to spend. Moody’s had said that Trump’s tariff will not have much effect on India.

A trade dialogue is also going on between India and America regarding tariff, in which very good progress has been seen. Now the decision of the court is considered to be in India’s favor because due to this India can get concessions in the trade dialogue. If the ban on reciprocal continues in future also, then India’s exports to America may remain unaffected.