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

Q. Unilateral tariff actions by major economies challenge the rules-based multilateral trading system under WTO. Analyse with reference to recent U.S. tariff policy. (15 marks, 250-350 words)

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.

(~330 words)

Sources: 1. WTO — Principles of the trading system (MFN, GATT Article I) — non-discrimination as the core WTO rule 2. CRS, Congressional and Presidential Authority to Impose Import Tariffs (R48435) — tariff power vests in the legislature; Section 232/301 as alternative authorities 3. CRS, The International Emergency Economic Powers Act: Origins, Evolution, and Use (R45618) — IEEPA's 1977 origins and sanctions-centred historic use 4. CRS, Supreme Court Rules Against Tariffs Imposed Under IEEPA (LSB11398) — 6-3 ruling of Feb 20, 2026, major questions doctrine, tariff share and collections 5. Economic Survey 2025-26, Chapter 1: State of the Economy — India's export-to-GDP ratio, H1 FY26 export growth, investor caution and the India-U.S. trade agreement