Opinion Staying the course on trade pacts with the UK and US

The uncertainty unleashed by Donald Trump’s tariffs has only been aggravated by a spate of recent court rulings. On May 28, the US Court of International Trade struck down Trump’s “Liberation Day” tariffs, saying that the emergency law (International Emergency Economic Powers Act) does not give the President the power to impose broad tariffs. However, a day later, a federal appeals court temporarily reinstated the tariffs. The case is now likely to work its way through the US legal system. The uncertainty is likely to linger on as the 90-day pause on the Liberation Day tariffs ends in the second week of July.

The Trump administration may have hoped that some trade deals would be quickly negotiated. And while the US and the UK have reached an agreement — the deal was announced on May 8th — progress with other major trading nations/blocks remains a protracted process. Take the case of China. A few days ago, US Treasury Secretary Scott Bessent is reported to have said that trade talks between the US and China “are a bit stalled”. Last Friday, Trump said that China has “totally violated” its agreement with the US, a charge that China has rejected. The US President is expected to speak to Chinese President Xi Jinping this week to iron out their differences. In the case of Japan, several rounds of talks have taken place, and another is expected before the G7 summit. But last Friday, the legal challenges to his tariffs notwithstanding, Trump also raised the tariffs on steel and aluminium to 50 per cent, potentially impacting countries such as Canada, Mexico and South Korea, which account for a sizeable share of US steel imports. A day later, the European Union, which had agreed to “accelerate talks” on a US trade deal, has also responded firmly, saying it is prepared to impose “countermeasures” against the US. It noted that such moves to increase tariffs “undermine ongoing efforts to reach a negotiated solution”. The new tariffs are effective from June 4.

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These latest tariff moves come at a time when India and the US are negotiating a bilateral trade deal. A US team is expected to visit India over the coming few days. On Monday, US Commerce Secretary Howard Lutnick, speaking in Washington at the US-India Strategic Partnership Forum’s leadership summit, said that a deal between the US and India could happen in the “not too distant future”. The India-EU trade deal also appears to be on course. As per a report, the two sides have agreed on several chapters, and the pact could be concluded before the end of the year. Coming after the finalisation of the India-UK agreement, the successful culmination of these deals would increase the country’s attractiveness as an investment destination.