Trump’s 'forced labour' tariff faces court challenge as 25 states sue US admin: What it means for India

The United States administration is facing a massive legal challenge as twenty-five US states sued the Trump administration on Monday (Aug 3) over latest tariff imposition. The complaint, filed in the US Court of International Trade, challenges tariffs of 10% or 12.5% on most goods imported from the affected economies, which together account for 99.4% of US. imports, according to the states. It also comes amid latest tariffs proposal to impose a whopping 500 per cent tariffs on several countries including India. The states fear that Trump might actually go ahead with his 500 per cent tariff after he imposed fresh double-digit tariffs on 59 countries and the European Union last month. The fresh tariffs were aimed at countries that had not done enough to stop imports made with forced labour, the White House explained, but these 25 states have argued that the move is an attempt to replace import taxes the Supreme Court struck down in February.

"After losing at the Supreme Court, the administration is once again trying to illegally raise taxes on families and businesses with a new round of tariffs," New York Attorney General Letitia James said. The lawsuit marks the latest clash over Trump's tariff policy, with the states saying the administration is trying to restore revenue lost after the Supreme Court blocked its earlier use of emergency powers.

Also Read: Can India balance ties with the US and Russia amid fresh tariff threats from America?

Has Trump approved the bill?

Trump has backed proposed legislation that could expose India to tariffs of up to 500 per cent over its continued purchases of Russian oil, according to a White House official. Responding to a query from ANI, the official confirmed Trump's support for the proposed Sanctioning Russia Act, saying simply, “President Trump supports the bill.” The bill was pushed by late US Senator Lindsey Graham and his sudden death has renewed support for the bill. If approved by Congress, the US president will be authorised to impose tariffs of up to 500 per cent on imports from countries that continue to purchase oil, gas and other energy products from Russia. India and China have been identified as top countries in this list.

Also Read: Buying Russian oil could cost India dearly? MEA breaks silence on US 100% tariff bill

Trump's tariff regime

Trump has argued that high tariffs will revive American manufacturing and has used the 1977 International Emergency Economic Powers Act, or IEEPA to establish his tariff regime. This sudden imposition of tariff regime forced several countries to strike a trade deal with the US. However, the US Supreme Court ruled that IEEPA did not authorise tariffs. The decision came as a setback for Trump and it forced the administration to refund importers who had paid the duties. After that setback, Trump turned to temporary worldwide tariffs of 10 per cent, but those expired at midnight on July 24. His administration then used section 301 of the Trade Act of 1974, which allows the president to impose import taxes and other sanctions against countries found to be engaging in unfair trade practices. Under section 301, Trump has imposed the new forced-labour tariffs, which range from 10 per cent to 12.5 per cent and apply to countries that account for 99 per cent of American imports, including India and China.

What the latest legal challenge means for India

The 500 per cent tariff is aimed to put economic pressure on countries that continue purchasing Russian energy and could force India to reconsider the scale of its Russian crude imports. If India cuts Russian oil imports and replaces them with costlier supplies from other producers, it could increase the country’s import bill and put upward pressure on fuel and transportation costs. The tariff threat also adds to the pressure for Indian negotiators during ongoing India-US trade talks, with Russia oil purchases emerging as a key sticking point. External Affairs Ministry spokesperson Randhir Jaiswal has said New Delhi is closely monitoring developments and engaging with US stakeholders. The legal challenge from within gives time to the Indian negotiators and can act as a bargaining tool.