U.S-India BTA: A Ticking Timebomb Built on Borrowed Time

Deal or Not?

3 months. 1 Bilateral Trade Agreement. No concrete outcome. What was initially being hailed as a landmark deal now resembles less of a victory lap and more of a salvage operation. While confidence in this India-U.S trade deal remains, at least publicly, undeterred, each passing round of inconclusive talks only dampens the odds of success. Only by moving beyond the diplomatic jargon of ‘constructive engagement’ does one realize that the deal has been legally compromised from the outset — and the concessions made by New Delhi might just have been a costly mistake.

The agreement is quite straightforward and, on its face, somewhat promising setting aside the technical complexities. Washington agrees to slash tariffs on Indian exports by as much as 7 percentage points — from 25% to 18% — in exchange for critical concessions from New Delhi, including opening up its domestic primary and secondary sectors to American goods, diverting significant investment toward American businesses and most importantly, ceasing further purchases of Russian oil.

Cracks Beneath the Surface

However promising the deal might sound at face value, recent legal proceedings against Trump’s Liberation Day tariffs have exposed significant cracks within the deal, leaving much to be desired. In hindsight, the outsized concessions made by New Delhi in exchange for the shaky promises offered by Washington now appear incommensurate — and New Delhi’s recent visit to Washington confirms as much.

To understand why the deal is losing its appeal gradually, one must acknowledge the legal framework that legitimized the tariffs in the first place: IEEPA, International Emergency Economic Powers Act. This federal statute empowers the President to raise or lower tariffs on any foreign state through executive action only. The BTA was thus constructed on a simple premise — Washington exercises its power to relieve some of the tariff pressure off New Delhi in exchange for considerable concessions, some of them being quite far-reaching.

On paper this seemed like a reasonable arrangement. Except that it turned a blind eye to the fact that IEEPA sits on a vulnerable piece of legislation that was being legally contested in the court at the very moment the deal was being agreed upon. The outcome wasn’t certain, but the risk was very much visible to anyone paying close attention.

The Ruling That Changed Everything

The verdict ultimately was what transformed the deal from an economic opportunity to a costly miscalculation. The Supreme Court’s 6–3 ruling in Learning Resources, Inc. v. Trump, struck down Trump’s tariffs as unconstitutional, concurring that IEEPA did not authorize the President to impose tariffs in the first place, thus rendering them legally void.

This instantly generated a cloud of uncertainty over trillions of dollars’ worth of trade agreements signed by Washington post-Liberation Day, as the legal foundation that backed the tariff commitments no longer exists — including the BTA with India.

India May Have Overpaid

This is where it gets interesting. While the ruling conveniently evaporated the American side of the bargain, the concessions made by New Delhi remain fully intact. Its commitment to reduce Russian oil purchases, its market access pledges on medical devices, tariff cuts on American goods — all remain officially part of the deal, since commitments do not un-make themselves simply because a U.S court struck down a key piece of legislation.

One might argue that the ruling turned out to be a double-edged sword — it did nullify the American side of the deal but also helped in reducing the overall tariff rate to 10% for New Delhi. However, that 10% assessment is a universal blanket rate applicable to every country that faced the brunt of Washington’s unjust tariffs. Put more acutely, the BTA delivered nothing of additional value that the Supreme Court wouldn’t have delivered for free if the deal had been pushed back by about a week or so. At the end, New Delhi might have traded real and costly commitments for a tariff number that they would have received regardless of any concessions made.

What’s Left?

The 10% tariff accommodation, though arguably better than the initial offer of 18%, comes as cold comfort for New Delhi since it is only a stopgap used by the Trump administration to fill the legal vacuum that resulted from the earlier ruling. Since the statute carries a built-in expiry — 150 days from its initiation — it must be voted upon by Congress for an extension unless they feel otherwise. The vote unfortunately falls just months before the Midterm Elections presenting a second complication. Given that the tariffs have already cost American families thousands of dollars in additional expenditure on gas, groceries, and other daily staples, voting on extending the statute would amount to committing political suicide for any incumbent seeking re-election, making an extension highly improbable.

Thus, India isn’t exactly navigating a prospective deal but rather being deceived into a countdown — a countdown to July when the 10% offer is most likely set to expire. If we also layer in the fact that New Delhi is being investigated for unfair trade practices by Washington which could produce new targeted tariffs, the picture becomes sharper still. The only promising instrument that brought India to the table — a guaranteed tariff relief — is off the board and is being replaced with a cluster of expiring statutes and investigations. Washington isn’t just offering India a weak deal. It’s offering one with an expiry date that nobody — on either side of the table—wishes to acknowledge.