India-US tariff saga under Trump: A look at key turning points
The US imposed escalating tariffs on Indian goods through 2025-26, citing India's continued purchase of Russian-origin crude oil alongside broader reciprocal tariff actions
A new sanctions bill cleared by the US Congress separately authorises tariffs of up to 100% specifically on major buyers of Russian oil and gas
India has maintained that these measures could adversely affect bilateral trade and overall engagement, while both sides continue discussions toward a limited trade agreement
India and the US have both stated an ambition to substantially expand bilateral trade in the coming years
IEEPA, the February 2026 Supreme Court ruling, and why Congress had to legislate
The International Emergency Economic Powers Act (IEEPA), 1977 had been the legal basis the US executive used to impose sweeping tariffs — including the 25% and subsequent 50% duties on Indian goods announced in 2025 over Russian oil purchases. In February 2026, the US Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that IEEPA does not authorise the President to impose tariffs at all, holding that the power to "regulate importation" under IEEPA does not include the power to tax imports — a power the Constitution reserves to Congress.
Key Details
- IEEPA (1977) had never explicitly mentioned "tariffs"; it empowered the President to "regulate importation" during a declared national emergency
- The August 2025 Executive Order imposing a 25% tariff on Indian goods (raised to a cumulative 50% by August 27, 2025) had relied on this IEEPA authority, citing India's Russian oil purchases as the emergency-linked justification
- The Supreme Court's February 2026 ruling invalidated IEEPA-based tariffs across the board, including the fentanyl-related and "reciprocal" tariff regimes imposed on most trading partners
- Because IEEPA could no longer be used, subsequent Russia-oil-linked tariff authority had to come from an explicit Act of Congress — the Sanctioning Russia and Iran Act — rather than a unilateral executive order
The shift from an IEEPA-based executive tariff order in August 2025 to a congressionally legislated tariff authority by September 2026 is a direct consequence of the Supreme Court reasserting that only Congress holds the constitutional taxing power — a key separation-of-powers principle for comparative-government analysis.
Bilateral Trade Agreement (BTA) negotiations versus a comprehensive FTA/CEPA
India and the US have been negotiating a limited or "interim" Bilateral Trade Agreement (BTA) rather than a comprehensive Free Trade Agreement (FTA) or Comprehensive Economic Partnership Agreement (CEPA). The distinction matters: an interim BTA typically covers a narrower set of tariff lines and issues to unlock quick wins, while a full FTA/CEPA covers goods, services, investment, IP, and digital trade comprehensively.
Key Details
- India's CEPA with the UAE, signed February 18, 2022 and in force from May 1, 2022, is a comprehensive model — negotiated in 88 days, covering over 11,900 Indian tariff lines and giving India preferential access on over 97% of tariff lines to the UAE market
- Unlike an FTA, a CEPA additionally covers trade in services, investment protection, government procurement, and digital trade
- The India-US discussions have proceeded as a narrower, phased BTA aimed at addressing specific tariff and market-access irritants rather than a full CEPA-style agreement
- Both governments have articulated a goal of substantially increasing bilateral trade over the coming years, even as the tariff and sanctions disputes run in parallel to the negotiation track
The tariff escalation and the trade-deal negotiations are running on separate tracks — the Russian-oil-linked tariffs stem from sanctions and emergency-powers law, while the BTA talks are a distinct market-access negotiation, illustrating how trade and sanctions policy can be pursued simultaneously without being formally linked.
- August 6-7, 2025: Executive Order under IEEPA imposed a 25% tariff on Indian goods (effective August 27, 2025), later raised to a cumulative 50% citing Russian oil purchases
- February 20, 2026: US Supreme Court (6-3, Learning Resources, Inc. v. Trump) ruled IEEPA does not authorise presidential tariffs, invalidating the IEEPA-based tariff regime
- September 16, 2026: US House passed the Sanctioning Russia and Iran Act (262-159), following Senate passage (86-11) on August 7, 2026, authorising tariffs of up to 100% via Congressional legislation rather than executive emergency powers
- India-UAE CEPA (2022) remains India's benchmark comprehensive trade agreement, in contrast to the narrower interim BTA format under discussion with the US