Unilateral tariff actions by major economies challenge the rules-based multilateral trading system under WTO. Analyse with reference to recent U.S. tariff policy.

Non-discrimination — Most-Favoured-Nation treatment under GATT Article I — is the first rule of the WTO order, binding members to treat all partners equally [1]. Recent U.S. tariff policy, built on emergency powers and later struck down by its own Supreme Court, shows how unilateralism by a systemically important economy destabilises this framework.

How unilateral tariffs erode the WTO system

• MFN breach: country-specific "reciprocal" duties discriminate between partners, negating the equal-treatment core of GATT Article I [1].
• Bound-rate violation: tariffs imposed outside negotiated schedules make concessions unpredictable, weakening the value of past trade rounds.
• Executive overreach: tariff power is a legislative power; using emergency statutes bypasses the deliberation that makes commitments credible [2].
• Retaliation spiral: with dispute settlement weakened, affected states respond with counter-tariffs, replacing rules with power bargaining.

The recent U.S. episode: IEEPA tariffs

• The IEEPA, 1977 was historically an instrument of targeted sanctions, never of tariffs, until its 2025 invocation [3].
• These duties formed roughly 70% of U.S. tariff architecture, yielding about $133.5 billion by December 2025 [4].
• In Learning Resources v. Trump (Feb 20, 2026), the Court held 6-3 that "regulate…importation" does not confer tariff power, applying the major questions doctrine [4].
• Yet unilateralism was relocated, not ended — tariffs were partly restored under Section 232 and Section 301 authorities [2].

Implications for India

• The Economic Survey 2025-26 notes India is comparatively insulated, goods exports being under 12% of GDP, with exports growing 5.9% in H1 FY26 on diversification [5].
• Tariff uncertainty nonetheless deterred portfolio investors, pushing India toward a bilateral trade agreement with the U.S. [5].

Judicial correction restrains one instrument but not the underlying drift from multilateralism to discretionary bilateralism. The durable remedy lies in reviving binding dispute settlement and updating WTO rules on emergency-justified trade measures, while India deepens market diversification and rules-based partnerships — sustaining the predictability on which developing-country trade growth depends.