Assess the impact of U.S. tariff policy volatility (2025-26) on India's export competitiveness and the global trading system governed by the WTO.

U.S. trade policy swung sharply between April 2025, when near-universal "reciprocal" tariffs were imposed under emergency powers, and February 2026, when the U.S. Supreme Court struck them down in Learning Resources, Inc. v. Trump, replacing them with a flat 10% tariff [1]. For India and for the WTO, the unpredictability has proved as damaging as the tariff levels themselves.

Adverse effects on India's export competitiveness

• Demand compression: the IMF projects India's growth moderating from 6.6% (2025) to 6.2% (2026) largely owing to higher U.S. tariffs, with shipments to the U.S. losing momentum [4].
• Labour-intensive sectors — textiles, gems and jewellery, marine products — face the sharpest margin squeeze, having little pricing power to absorb duties.
• Contract uncertainty: the replacement 10% duty rests on a time-limited statutory authority, deterring long-horizon buyer contracts and investment [1][3].

Cushioning factors

• The effective U.S. tariff rate fell from 14% to about 9.9% after the ruling, with pharmaceuticals and semiconductor-related goods exempted — protecting India's largest merchandise export line [3].
• Services and IT exports lie outside the tariff net; domestic GST reform partly offset the shock [4].
• The IMF finds deeper integration with alternative partners the least distortionary response — validating India's FTA push over retaliation [5].

Stress on the WTO order

• The WTO projected world merchandise trade volume falling 0.2% in 2025, with North American exports down 12.6% [2].
• Tariffs set unilaterally under emergency powers bypass MFN and bound-tariff commitments, in a system whose Appellate Body is already paralysed.
• The judgment restored tariff-setting to the legislature [1] — a domestic constitutional correction, not a multilateral one.

The episode confirms that rules, not rates, anchor trade confidence. India's durable response lies in export diversification, FTA deepening, PLI-backed value addition and coalition-building for WTO dispute-settlement reform — converting a volatile external environment into an opportunity for resilient, rules-based integration.