Fate of US trade deal post tariff takedown

A prudent approach for India is to let uncertainties arising out of the SCOTUS ruling resolve themselves to the extent possible before finalising the trade deal with the US, and pursue domestic policy reforms

- Amartya Lahiri Devashish Mitra

The Supreme Court of the United States of America (SCOTUS) handed the Trump administration, arguably, its biggest institutional pushback by striking down the tariffs that the US had imposed under the International Emergency Economic Powers Act of 1977. Given that these tariffs have been the centrepiece of President Trump's economic policy in his second term, the legal setback now raises myriad issues spanning administrative details, policy options and political fallouts.

The administrative challenges thrown up by the SCOTUS ruling are with regard to the almost $300 billion in revenue that has been collected by the US government since the tariffs went into effect. Given the ruling, the tariffs that were collected potentially have to be refunded. This presents a formidable challenge in terms of the records that have to be organised in order to send the refunds to the right businesses and in the correct amounts. Moreover, since some businesses may have passed on the tariffs to their consumers, the refunds also raise a secondary issue of equity: Money that should be going to consumers will end up with businesses, representing, in effect, a redistribution from consumers to firms. Some of these issues will likely end up in court, sooner or later.