The warning came after the United States Court of International Trade struck down Trump’s 10% global tariffs imposed under Section 122 of the Trade Act of 1974, dealing yet another blow to the administration’s aggressive tariff strategy. The ruling, delivered on May 7 in a 2–1 decision, came less than 50 days after the tariffs were introduced on February 20.
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According to GTRI, the judgment marks the second major judicial setback to Trump-era trade measures after the US Supreme Court earlier invalidated the administration’s reciprocal tariffs. Together, the rulings are pushing the United States back toward its traditional World Trade Organization-linked Most Favoured Nation (MFN) tariff structure.
“The continuing uncertainty around US tariff policy, with major Trump-era tariffs repeatedly struck down by courts, makes any long-term trade commitments by India difficult to justify,” the report said.
An unpredictable trade posture
GTRI argued that Washington’s trade posture has become increasingly unpredictable, with the administration shifting from one legal mechanism to another to preserve broad tariff powers. The think tank described it as a “cat-and-mouse game” in which the White House invokes one statute to impose tariffs, only to pivot to another after courts intervene.
The latest ruling centred on Section 122 of the Trade Act of 1974, a provision that allows the US president to impose tariffs of up to 15% for 150 days without Congressional approval during serious balance-of-payments crises.
However, the trade court ruled that the administration had exceeded the authority granted under the law, stating that Section 122 was designed to address emergency balance-of-payments situations rather than serve as a tool for reducing trade deficits through sweeping tariffs.GTRI said the legal foundation of the tariffs was weak from the outset because the United States has operated under a free-floating dollar system since 1973. Under such a system, trade imbalances are generally adjusted through currency movements and capital flows instead of import restrictions.
“The US continues to run large trade deficits while still attracting massive foreign investment because the dollar remains the world’s dominant reserve currency,” the report noted.
The court’s ruling currently applies only to the plaintiffs in the case — the state of Washington, spice importer Burlap & Barrel, and toy company Basic Fun— meaning the tariffs remain in force for other importers while the administration pursues an appeal before the US Court of Appeals for the Federal Circuit.
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Still, GTRI said the repeated judicial reversals are beginning to reshape global trade calculations.
“Such uncertain tariff regime in world’s largest market creates uncertainty for businesses, disrupt global supply chains, and raise costs for manufacturers and consumers,” it said.
The think tank also warned that the Trump administration could now intensify the use of more targeted trade tools such as Section 301 investigations and Section 232 national security tariffs against sectors including steel, semiconductors, automobiles, pharmaceuticals and critical minerals.
The legal uncertainty is already influencing trade negotiations, GTRI said, pointing to Malaysia’s reported decision to walk away from a trade deal with the United States while other countries reassess engagement with Washington.
What India stands to lose
For India, the concern is more structural. GTRI argued that the US is currently unwilling to reduce its own MFN tariffs while simultaneously pressing India to lower or eliminate duties across multiple sectors under a proposed bilateral trade agreement.
“Under such conditions, any trade deal risks becoming one-sided, with India offering permanent market access concessions without receiving any meaningful tariff benefits in return,” the report said.
Ajay Srivastava, founder of GTRI, said India should wait for the United States to develop a more stable and legally reliable trade framework before concluding any major trade pact with Washington.