In this Reflection, Manas Raj Singh1 argues that the 2025-26 U.S.-India tariff dispute did not mark the collapse of a rules-based order but rather exposed the enduring coercive structures that have long underpinned international economic governance. Drawing on TWAIL scholarship, he traces how different legal instruments have repeatedly constrained the policy autonomy of states in the Global South.
TWAILR: Reflections ~ 92/2026
The subordination of formally sovereign states does not require the vocabulary of empire. It requires only the right instrument. On 6 February 2026, the governments of the United States of America (U.S.) and India announced the framework of an Interim Trade Agreement through a joint statement issued by the White House. Washington said it would apply an eighteen per cent reciprocal tariff to originating goods from India, down from the earlier twenty-five per cent rate, and removed the additional twenty-five per cent tariff imposed in August 2025 in response to India’s purchases of Russian oil. India committed to halting purchases of Russian oil entirely, to reducing its tariffs on American industrial and agricultural goods, and to negotiating “robust, ambitious, and mutually beneficial digital trade rules.” India also stated that it intended to purchase five hundred billion dollars in American energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. The published joint statement records no commitment on Russian oil; that undertaking appears only in the U.S.’s own account of the framework and in the executive order lifting the penalty tariff.
Fourteen days later, in Learning Resources, Inc. v. Trump, the U.S. Supreme Court held that the International Emergency Economic Powers Act (IEEPA) did not authorise the tariffs the U.S. had imposed in August 2025. The punitive rate India had been negotiating against ceased to exist legally.
A familiar reading of these events is already taking shape among liberal internationalist commentators in Washington and some of Delhi’s retired ambassadors. The prevailing consensus holds that, after 1945, the U.S. built an international order based on rules through Bretton Woods, the World Trade Organisation, and the treaty architecture of trade and investment. That order served the world reasonably well for three generations, but, with the imposition of the 2025 tariff regime, the country that built this world order had abandoned it, heralding a cruder, more unilateral age.
This reading is consoling to those who spent their careers inside the older institutional framework. It is also a mistake. The rules were never merely a polite costume worn over raw coercion, to be discarded when inconvenient. As Antony Anghie’s foundational TWAIL scholarship demonstrates, international law has itself been shaped by colonialism, and its rules can therefore reproduce coercive structures in legal language — more quietly and more technically, but along the same structural lines. Whether the mechanism is structural adjustment or lopsided arbitration, the result can be similar. Power is removed from parliaments that were meant to hold it and transferred to institutions where the hegemon writes the rules.
The imposition of the August 2025 tariffs and the subsequent February 2026 framework did not end a rules-based trading system. They merely stripped the system of its polite, diplomatic vocabulary. Power changes its legal dress often enough that each generation must relearn that the structural hierarchy underneath remains the same.
Three Decades, Three Instruments
In the summer of 1991, with India’s foreign exchange reserves reduced to roughly three weeks of import cover, the Reserve Bank airlifted sixty-seven tonnes of gold to the Bank of England and the Union Bank of Switzerland as collateral for emergency credit. India’s economic crisis, and its negotiations with the International Monetary Fund, helped shape the terms of what was announced as the New Economic Policy. The rupee was devalued, the industrial licensing regime was dismantled, and the role of the public sector was substantially reduced. As per B.S. Chimni’s account of international institutions as instruments of an emerging imperial global state, the reforms were adopted in Delhi, but their content had been heavily shaped by Washington-based institutions.
Two decades later, the same logic returned in a different instrument. After the Indian Parliament enacted a retrospective tax amendment in 2012 to address indirect offshore transfers, Vodafone and Cairn Energy both invoked bilateral investment treaties, pursuing claims against India at the Permanent Court of Arbitration in The Hague. In 2020, the court ruled against the Indian state in both cases. In 2021, the same Parliament that had passed the retrospective tax amendment repealed it. This reversal occurred not because a domestic court required it, nor because voters demanded it, but because private arbitral tribunals in Europe had made enforcement of an Indian statute globally untenable.
Similarly, the U.S. Trade Representative (USTR) has placed India on its Priority Watch List without interruption for more than fifteen consecutive years, most recently in 2026. U.S. concerns have centred on section 3(d) of India’s Patents Act, which restricts pharmaceutical multinationals from evergreening patents on minor reformulations of existing drugs unless they demonstrate enhanced efficacy. Even though the Supreme Court of India applied the provision in Novartis AG v. Union of India & Others (2013), the USTR continues to criticise section 3(d), treating a sovereign judicial ruling as a trade barrier.
While structural adjustment programmes, bilateral investment arbitration, and intellectual property watchlists operate in entirely separate legal domains, they function identically. They systematically circumvent domestic, democratic lawmaking to subordinate peripheral economies to the interests of global capital.
Why does this system endure? The structural asymmetry of the U.S.–India economic relationship leaves India with limited leverage. In the 2024–25 fiscal year, the U.S. received approximately twenty per cent of India’s merchandise exports. For Delhi, this market is a macroeconomic lifeline. For Washington, Indian imports represent a statistically negligible fraction of total U.S. trade, granting the U.S. substantial structural leverage. The dollar intensifies this imbalance. For example, transactions routed through the U.S. financial system may become subject to American sanctions and other forms of extraterritorial regulation.
India has faced this jurisdictional overreach before, losing access to Iranian crude under U.S. secondary sanctions in 2019, and to a sharp reduction in Venezuelan crude imports shortly thereafter. In 2025, the U.S. imposed an additional twenty-five per cent tariff on Indian goods because India was directly or indirectly importing Russian oil. Washington did not need to deploy military force; it needed only to turn the valve of global financial plumbing as an instrument of pressure.
The most durable form of hegemony is not the one that forces submission. It is the one that makes submission look like strategy.
The Cost of Refusal
The Interim Trade Agreement was not the total surrender some commentators have claimed. What happened in the Commerce Ministry between August and February looked less like surrender than triage. Indian negotiators entered the conversation knowing exactly what they needed to protect and what they were prepared to concede. Russian oil was always a negotiable concession. By late 2025, the arithmetic had stopped working. The discount on Urals crude was shrinking, while the payment workarounds were becoming unsustainable. Simultaneously, the risk of losing U.S. market access for textiles and gems had grown too expensive to ignore. Moving away from Russian crude could be understood not simply as a reversal of policy but as the winding down of an arrangement whose economic and diplomatic costs had risen. In reality, India’s energy transition was far more constrained than a simple switch from direct Russian imports to Gulf-refined alternatives. Logistical bottlenecks in the Strait of Hormuz, combined with the unpredictable issuance and expiration of U.S. sanction waivers, meant that India remained entangled in direct crude imports from Russia. The state was forced into continuous and fragile diplomatic manoeuvring rather than a clean policy break.
The central loss was not immediate energy security but the perception of sovereign capitulation. India sent a clear, chilling message to the rest of the Global South: economic coercion works. Threatening access to the U.S. market and the dollar for eight months was enough to alter the policy of a state representing 1.4 billion people.
On 20 February 2026, in Learning Resources, the U.S. Supreme Court ruled 6-3 that the president did not have authority under the IEEPA to impose tariffs, invalidating the challenged IEEPA-based reciprocal and drug-trafficking tariffs and with them the legal basis of every reciprocal tariff collected since April 2025. Within hours, the administration invoked section 122 of the Trade Act of 1974 to impose a ten per cent global surcharge, subject to exceptions, for up to one hundred and fifty days — below the fifteen per cent ceiling that provision allows.Treasury Secretary Scott Bessent stated the same day that section 122, combined with enhanced section 232 and section 301 measures, would leave tariff revenue ‘virtually unchanged’ from the invalidated regime. The consequences for India were disorienting. Once the Supreme Court held that IEEPA did not authorise the challenged tariffs, the previously announced eighteen per cent reciprocal rate lost its statutory basis. Indian goods became subject instead to the 10 per cent surcharge. The February framework, however, expressly allowed either country to modify its commitments if the other changed its agreed tariffs. India’s concessions were therefore not unconditionally binding; their continued operation depended on how the parties applied or renegotiated the framework. This is what a rules-based order looks like from Delhi: the legal basis of economic pressure can be substituted overnight, while the asymmetry that gives the pressure its force is left untouched. The point was made again in May 2026, when the Court of International Trade held the section 122 proclamation invalid, the Federal Circuit stayed the injunction, and collection continued undisturbed to the surcharge’s statutory expiry in July.
What the Episode Revealed
Other capitals were watching. The European Union, seeking to insulate its supply chains from unilateral U.S. tariffs, concluded negotiations with India on a free trade agreement on 27 January 2026, although the text still awaits legal revision and ratification on both sides. In December 2025, Putin’s India-Russia summit also reaffirmed cooperation on trade, national currency settlement, energy and defence production. Meanwhile, China has continued to expand its yuan-denominated oil settlement infrastructure. These developments can be seen as efforts to mitigate reliance on a financial architecture that has been weaponised. However, there is no parallel financial system yet and there is no evidence that any treasury official believes that one is close. The U.S. market and dollar-clearing system had been long understood as features of a stable global architecture. The events of 2025 and 2026 showed that access to that architecture can also function as an instrument of state power, even when a single executive administration is curtailed by domestic courts.
The next frontier is apparent in the agreement. The Joint Statement’s promise to negotiate “robust, ambitious, and mutually beneficial digital trade rules” sounds cooperative but may place aspects of India’s digital regulatory framework on the negotiating table. The Digital Personal Data Protection Act, 2023 does not impose a general data-localisation requirement; it does, however, authorise the central government to restrict transfers of personal data to specified countries or territories. The Digital Personal Data Protection Rules, 2025 contemplate narrower restrictions on the transfer of specified personal data processed by designated Significant Data Fiduciaries, although not all of these provisions are in force yet. India’s Equalisation Levy on foreign digital companies to prevent the uncompensated extraction of Indian citizen data by foreign technology monopolies is no longer operative, having been withdrawn in full, with effect from 1 April 2025 — days before the reciprocal tariff programme was announced. The February framework does not by itself surrender India’s digital regulatory autonomy; it places that autonomy on the agenda of the negotiations to come. The circumstances of the Levy’s withdrawal are a reminder of how such agendas tend to be settled.
The most effective compliance is the kind that the compliant believe they chose freely.
Elaine Brown, who chaired the Black Panther Party from 1974 to 1977, announced her authority plainly: “I have all the guns and all the money.” As a description of raw capacity, the line resonates with U.S. military and financial power. What Brown said next, that she could therefore “withstand challenge from without and from within”, is where the analogy fails. Withstanding open challenge is expensive; it requires constant demonstration. The genius of the current global system is that it does not have to run on fear at all. It runs on compliance. The most effective compliance is the kind that the compliant believe they chose freely. India’s finance ministers did not endorse the February agreement because they were afraid. They did so because the economic cost of refusal was sufficiently high that agreement appeared, from a rational perspective, to be the better option. The most durable form of hegemony is not the one that forces submission. It is the one that makes submission look like strategy. When the dominated nation celebrates the tightening of its own constraints, the system is working exactly as designed.
For TWAIL scholarship, the extraction of sovereignty from the Global South is a longstanding concern. The 2025–26 U.S.–India tariff episode reveals an evolution in how that power is deployed. India is no longer framed by Washington as peripheral or as an adversary. Rather, Washington lauds India as an indispensable strategic partner, a member of the Quad, and a democratic counterweight to China in the Indo-Pacific. Yet, when economic imperatives collided, that strategic partnership offered no shield against unilateral coercion. The contemporary U.S. trade regime needs only an executive order and the structural monopoly of the dollar to subordinate its allies as effectively as its adversaries. The mechanisms of extraction grow increasingly technical, but the structural hierarchy of the international economic order remains undisturbed. The system has never been fully masked. What changes, with each generation, is only the name of the instrument.