'Lot of uncertainty': Trump’s 15% tariff may aid parts of Asia-Pacific; SC ruling clouds India trade pact, says Moody’s

A proposed uniform 15% tariff by US President Donald Trump could offer relative relief to several Asia-Pacific economies that were previously hit with steeper, country-specific duties, Moody’s Analytics said on Tuesday. However, the recent US Supreme Court ruling against differentiated tariffs has injected fresh uncertainty into Washington’s trade strategy, including its evolving agreements with India and Indonesia.

According to Moody’s, a flat 15% levy would be comparatively favourable for economies such as China and much of Southeast Asia, which had been subject to significantly higher targeted tariffs. By contrast, the impact on countries like Japan, South Korea and Taiwan (China) would likely be limited, as their base tariff exposure is already around the 15% level.

"There is a lot of uncertainty, but we do know a few things. A uniform 15 per cent tariff would benefit some Asia-Pacific economies that have faced much steeper country-specific levies," Moody’s said in a statement.

Last week, the US Supreme Court ruled against the Trump administration’s country-specific tariff framework. In response, Trump imposed a temporary 10% tariff on all countries for 150 days and subsequently announced plans to raise the rate to 15%. However, no formal executive order or proclamation has yet been issued to operationalise the higher rate.

Moody’s noted that the court’s decision could complicate ongoing and recently concluded trade discussions. "The court ruling also raises questions about the recent trade deals made with India and Indonesia. Key details such as the timeline for India to wind down purchases of Russian oil and the volume of tariff-free textile exports from Indonesia have yet to be finalised. India has delayed plans to send a delegation to Washington," it said.

The agency added that the Supreme Court’s intervention restricts Washington’s ability to deploy country-specific tariffs as a negotiation tool. This constraint could reduce US leverage in bilateral trade talks, including in high-profile engagements such as the expected meeting between Trump and Chinese President Xi Jinping in the coming weeks.

"We expect Trump to find other legal routes to raise tariffs, and we wouldn't be surprised if US tariffs end up close to where they sat before Friday. Some governments may slow-walk ratification of trade deals with the US, but we think they are unlikely to quit altogether for fear of inviting more punitive tariffs," Moody’s said.

Even under a relatively optimistic scenario — where tariff rates eventually settle below pre-February 20 levels—trade flows may remain disrupted. Moody’s cautioned that uncertainty and operational bottlenecks could persist, with companies potentially seeking reimbursement for tariffs already paid.

"We may also see a fresh round of front-loading; if US importers treat the ruling as a temporary reprieve, they could rush shipments before tariff walls rise again. In short, the decision may offer momentary relief, but business and policymakers would be wise to keep the champagne on ice," it said.

For India, the ruling introduces additional complexity into an already delicate trade equation, as policymakers balance geopolitical considerations, energy imports and export market access amid a shifting US tariff regime.

Legal shock reshapes India-US trade talks

The uncertainty has already had immediate diplomatic consequences. Indian trade negotiators, who were scheduled to travel to Washington, DC, for three days of talks to finalise the legal text of the India-US trade agreement struck earlier this month, were forced to abort their trip as New Delhi sought a rescheduling.

The disruption followed the US Supreme Court’s 6-3 verdict, authored by Chief Justice John G. Roberts, which held that the International Emergency Economic Powers Act (IEEPA) did not grant the president authority to impose tariffs. The ruling restored Congress’s primacy over taxation and tariff powers, effectively dismantling the legal architecture that underpinned Trump-era country-specific levies.

For trading partners seeking tariff relief, the ground shifted abruptly. In response, the Trump administration invoked Section 122 of the Trade Act of 1974 — a rarely used provision permitting duties of up to 15% for 150 days without prior congressional approval. The move resulted in a “temporary global tariff”, initially set at 10% and then raised to 15%, replacing a patchwork of emergency tariffs with a uniform, time-bound surcharge.

For India, the shift rendered a fast-tracked interim deal commercially uncertain. The draft pact had assumed tariff stability and envisaged reciprocal concessions, including potential restoration of Generalized System of Preference (GSP) benefits for Indian exports, calibrated access for US agricultural and medical-device products, and sector-specific duty reductions.

With the legal foundation in flux, Indian officials described the postponement as a “strategic recalibration, not retreat”, India Today reported on Monday. New Delhi is seeking clarity on whether the 15% levy is an additional duty or a temporary substitute, and whether US Congress will endorse, amend or allow it to lapse after 150 days.

(With agency inputs)