And What Comes Next
A month ago, the U.S.–India interim trade deal appeared to be within reach. Both sides had aligned on the broad framework — India would curb Russian oil imports, lower duties on American goods, and commit to $500 billion in bilateral trade by 2030. Washington, in turn, would reduce punitive tariffs on Indian exports. Commerce Secretary Rajesh Agrawal had penciled in mid-March as a signing window.
That timeline is now off the table.
Three separate forces — a landmark U.S. Supreme Court ruling, an escalating conflict with Iran, and Washington’s latest tariff offensive — have created a more complicated landscape. Here is what happened, and where this is most likely heading.
- The Supreme Court Reset
On February 20, 2026, the U.S. Supreme Court ruled 6–3 that President Trump’s sweeping ‘reciprocal tariffs’ — imposed under the International Emergency Economic Powers Act (IEEPA) — exceeded the authority Congress had delegated to the executive branch. The ruling did not end tariffs. But it removed the administration’s fastest and broadest tool for creating urgency at the negotiating table.
Within 24 hours, Washington pivoted to a 10% universal tariff under Section 122 of U.S. trade law — a mechanism that carries its own constraint: it expires after roughly 150 days without congressional approval. The threat structure that originally pushed both sides toward a deal has fundamentally changed.
For India, this changed the calculus entirely. India’s Commerce Minister Piyush Goyal was direct — his country would resume talks only when there is ‘more clarity.’ Sources in New Delhi were blunter: ‘We are not in a hurry to sign any deal.’ New Delhi also has legitimate questions: under the original framework, India’s exports were to face an 18% duty rate. It is now unclear whether Washington will revert to that number or apply a different level.
Our estimate: the interim deal is now likely 3 to 4 months away at the earliest, with a comprehensive Bilateral Trade Agreement more realistically a late 2026 or 2027 outcome.
- Iran — The Geopolitical Wildcard
While trade negotiators paused, a larger crisis absorbed Washington’s attention. The U.S.-Israel conflict with Iran has closed the Strait of Hormuz to commercial shipping, sending Brent crude above $120 a barrel and disrupting energy flows across the region.
For India, the exposure is significant. More than 60% of India’s oil and over 80% of its gas transit the Strait of Hormuz. Within days of the conflict escalating, domestic LPG prices rose ₹60 per cylinder, flight cancellations mounted, and airline capacity tightened across Gulf routes. Some 9.1 million Indian workers in Gulf Cooperation Council countries — who remit approximately $50 billion home annually — now face genuine income risk if the conflict prolongs.
The Chabahar port corridor — India’s key trade route to Central Asia that bypasses Pakistan — faces indefinite delays. The U.S. waiver permitting Indian operations at Chabahar expires in April, and renewal is now uncertain.
There is one near-term offset. The U.S. has granted India a 30-day waiver to continue buying Russian crude — an acknowledgment that with Gulf supply disrupted, Washington cannot simultaneously cut off India’s alternative source without triggering a deeper crisis. This is a pragmatic concession, not a strategic shift. The underlying pressure to reduce Russian oil dependency remains firmly on the table.
For supply chain and sourcing professionals: the Iran conflict reinforces what we have been saying for the past year. Optionality in energy sourcing and logistics routes is not a planning luxury — it is a business continuity requirement.
- Section 301 — Washington’s New Tariff Toolkit
On March 11–12, the Office of the U.S. Trade Representative launched a fresh round of Section 301 investigations targeting 16 economies: India, China, the EU, Japan, South Korea, Mexico, Singapore, Switzerland, Norway, Australia, Indonesia, Malaysia, Thailand, and others. The stated focus is ‘structural excess capacity and production in manufacturing sectors’ — broadly targeting industrial subsidies and state-directed production.
This is a significant legal shift. Unlike the IEEPA tariffs struck down by the Court, Section 301 is congressionally grounded and legally durable. USTR Jamieson Greer signaled that the investigation could lead to new tariffs as early as this summer.
India has read this clearly. New Delhi views the probe as a pressure tactic — a way to force trading partners into signing bilateral deals now that the IEEPA route has been closed. One government source called it ‘a spanner in the works.’ India plans to present its position to USTR and has signaled it may approach the WTO if the investigation proceeds unfairly.
The practical implication for business: Section 301 investigations typically run up to 12 months, but outcomes can be accelerated under political pressure. Companies sourcing from India in industrial goods, chemicals, electronics, and manufacturing-adjacent sectors should begin scenario planning now — because the investigation’s conclusions will directly shape duty structures going into 2027.
What to Expect: Timing and Probabilities
Our current read on the most likely outcomes:
| Outcome | Probability | Estimated Timeline |
| U.S.–India interim deal signed – Tariffs reduced | 55–65% | June–August 2026 |
| Full Bilateral Trade Agreement | 40–50% | Late 2026 – Early 2027 |
| Section 301 tariffs imposed on India | 30–40% | June’ 2026 |
| Deal delayed beyond 2026 | 20–25% | 2027+ |
The biggest swing factor is Iran. If the conflict de-escalates within the next 60 days, Washington’s bandwidth returns to trade negotiations and both sides have reason to close the gap quickly. If the conflict prolongs through summer, the bilateral deal slips further — and the Section 301 investigation becomes the dominant pressure mechanism. India will not sign under duress. It has demonstrated, repeatedly, that it absorbs pressure without capitulating.
Final Thought
The U.S.–India trade deal is not dead. It is navigating a messier set of circumstances than anyone anticipated when the year began. For business leaders and sourcing teams, the lesson is a familiar one: do not structure your supply chain strategy around a single policy outcome.
The organizations best positioned through this period are not waiting for a deal to be signed. They are qualifying suppliers in India now, building parallel options in Mexico and Vietnam, and structuring contracts that flex as tariff realities shift. The India–EU FTA, which is already in motion, provides a separate and more stable planning horizon for companies with EU-facing supply chains.
We remain cautiously optimistic that a partial U.S.–India agreement gets done before year-end. But the path will be longer, and the conditions will be different from what was originally expected. Plan for that — not for the deal that was supposed to happen last month.
The deal is coming. Just not on anyone’s original schedule.
