Retaliatory Tariffs and International Trade Law

U.S. Reciprocal Tariffs and the Challenge to International Trade Law: A Wake-Up Call for India and the Global South.
The global trade order has once again been rattled—this time by the U.S. reciprocal tariffs announced on April 2, 2025, under the leadership of President Donald Trump.

The statement has already caused worldwide indignation, even though the policy is only temporarily on hold for 90 days (excluding tariffs on China).

The most worrisome component is that the tariffs are against international trade law, especially the standards set by the World Trade Organisation (WTO).

Even more disappointing is India’s trade response, which has been widely perceived as muted, especially when it is expected to lead the Global South in advocating a fair and rule-based trading system.

The Nature of U.S. Reciprocal Tariffs

Tariffs that are reciprocal are fundamentally one-sided. This policy gives one nation the power to punish another for what it sees as unfair trade practices by imposing taxes on goods and services. But within the global framework of the World Trade Organisation, such measures constitute an obvious breach of international trade law.

A basic idea of WTO rules, the Most Favoured Nation (MFN) principle prevents trade discrimination among members of different countries. The US choice to apply selective tariffs runs counter to this idea.

Instead of supporting a rule-based global system, President Trump has advocated a transactional approach in his trade policies. His administration’s move is not just a trade policy shift; it is a direct challenge to the legitimacy of international trade law.

Global Reactions: From BRICS to Canada

In response to the US declaration, several nations have spoken out strongly in support of international trade law and the rule-based trading system. China has denounced the U.S. decision, initiated a formal dispute at the WTO, and imposed retaliatory tariffs on American goods.

• Brazil, another BRICS member, termed the tariffs a “violation” of WTO commitments.

• Singapore's Prime Minister Lawrence Wong declared the action a “complete repudiation of the MFN principle”.

• Japan stated unequivocally that the unilateral imposition of tariffs contradicts WTO rules.

• Canada has taken a two-pronged approach imposed retaliatory tariffs and simultaneously filed a legal challenge at the WTO regarding tariffs on automobiles and auto parts.

The BRICS trade stance, especially that of China and Brazil, reflects a strong alignment with international trade law and a commitment to multilateralism.

India’s Weak Trade Response: A Lost Opportunity?

The trade response of India has been significantly more moderate, in stark contrast. Despite the widespread expectation that India would assume a leadership role on behalf of the Global South, the silence has been deafening.

India, a burgeoning economic power and a critical participant in the Global South leadership, possesses the capacity and responsibility to advocate for international trade law.

Historically, India has been a vocal advocate for the rule-based trading system. Its lack of a robust response now sends the wrong signals—not just to its trading partners but also to the developing world that looks up to India for representation and voice at the global stage.

The WTO in Crisis?

Questions regarding the World Trade Organization's relevance and jurisdiction are brought to light by the introduction of U.S. reciprocal tariffs.

The United States' obstructionism has made the World Trade Organization's Appellate Body even more ineffective in recent years. Because strong nations like the US are breaking international trade law, the dispute settlement process of the WTO is in a precarious position.

Establishing a precedent whereby nations reject the MFN concept and apply retaliatory tariffs without following correct processes would be counterproductive. Trade confidence and stability have dropped as multilateral bodies have collapsed.

Implications for UPSC Aspirants

For UPSC aspirants, understanding this issue is crucial for multiple areas of the syllabus:

1. GS Paper II – International Relations

• India's foreign policy posture in global trade

• Role in Global South leadership

• Multilateral institutions like the WTO

2. GS Paper III – Economic Development

• Impact of retaliatory tariffs on the

• India’s trade policy and international trade law

3. Essay & Ethics

• Global equity and justice in the international economic order

• Ethics of global power imbalance and unilateralism

What Should India Do?

India needs to reconsider its position. An individual's credibility is undermined when they remain silent in the face of injustice. As a country aiming for world leadership, India should:

• Publicly condemn the U.S. tariffs as violations of international trade law

• Coordinate with other BRICS and developing nations to build pressure within the WTO.

• Strengthen legal and diplomatic channels to ensure adherence to MFN principles.

• Reignite its commitment to a rule-based trading system.

India will further solidify its role as a leading example of fair trade among developing countries and safeguard its own interests through its proactive leadership.

Final Thoughts

The current episode of U.S. reciprocal tariffs is not just another trade dispute; it is a fundamental challenge to the international trade law system. Countries like China, Brazil, and Canada have stepped up to defend multilateralism.

It is time for India to do the same. With its geopolitical stature and moral responsibility, India must rise to the occasion, defend the rule-based trading system, and guide the Global South toward a more equitable global trade order.