India hits pause on U.S. trade pact as Trump’s 15% tariff jolts negotiators

2026-02-22 10:11:33

India hits pause on U.S. trade pact as Trump’s 15% tariff jolts negotiators

Investing.com

Sun, February 22, 2026 at 6:29 PM GMT+9 2 min read

Investing.com – Indian trade officials have hit the brakes on a planned visit to Washington to finalize a long-awaited interim trade deal. The decision to postpone the mission, originally set to begin February 23, comes as New Delhi scrambles to assess the “legal and commercial chaos” triggered by the U.S. Supreme Court’s Friday ruling.

That landmark decision struck down the International Emergency Economic Powers Act (IEEPA) tariffs. These duties formed the bedrock of President Trump’s recent trade negotiations with Prime Minister Narendra Modi. The sudden judicial reset has left both nations without a clear legal framework for their previous agreements.

The strategic landscape shifted even further over the weekend. Following the court’s rebuke, President Trump quickly invoked Section 122 of the Trade Act of 1974 to impose a 10% global surcharge, which he then hiked to 15% on Saturday.

For Indian exporters, this creates a bizarre scenario. The 18% “preferential” rate negotiated just weeks ago in exchange for major concessions is now effectively higher than the new 15% global baseline. This shift has rendered the original deal commercially obsolete almost overnight.

Concessions under review amid legal “reset”

India’s Ministry of Commerce is reportedly re-evaluating the “quid pro quo” of the interim framework. Under the original deal, India agreed to halt purchases of Russian oil and commit to $500 billion in U.S. imports over five years. In exchange, the U.S. promised to lower punitive 25% duties to 18%.

Now that the Supreme Court has declared those 25% duties illegal, New Delhi is questioning the value of its concessions. Negotiators are essentially being asked to pay for a “discount” that may no longer be necessary under the new 15% global surcharge.

The delay is a blow to sectors like textiles, pharmaceuticals, gems, and jewelry. These industries were banking on a settled trade environment by the second quarter. Negotiators now face a “reset” moment where they must decide whether to demand a rate significantly lower than the 15% global baseline to stay competitive.

Supply chain volatility and the 150-day window

Traders on Investing.com are closely monitoring Indian ADRs for signs of stress following the postponement. The uncertainty complicates the planned March visit by U.S. Trade Representative Jamieson Greer, which was intended to be the final signing ceremony.

If the two nations cannot align on a new “floor” for duties, Indian engineering and tech exports could face prolonged pricing volatility. The broader market implication is a return to “trade by investigation,” as the 15% surcharge is currently framed as a temporary, 150-day measure.

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_Reporting by Simon Mugo _

India hits pause on U.S. trade pact as Trump’s 15% tariff jolts negotiators

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