The United States Supreme Court on Friday invalidated tariffs imposed under emergency powers, forcing the Donald Trump administration to reconfigure how duties are applied on foreign goods.
For India, this development has recalibrated tariff rates on its exports to the US yet again, coming within weeks of a bilateral trade framework being announced between Washington and New Delhi.
The ruling has also thrown into question the future of dozens of trade arrangements negotiated under the now-invalid emergency provisions.
How did Trump & Co. respond to the Supreme Court ruling?
The Supreme Court’s decision to
strike down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) forced the US administration to dismantle a central pillar of its trade enforcement strategy.
In response, the White House moved rapidly to introduce a substitute framework that would allow tariffs to remain in effect while complying with the court’s interpretation of the law.
Late on Friday, Trump signed executive orders
establishing a temporary global import duty of 10 per cent under Section 122 of the Trade Act of 1974.
This provision, which had never been used before, grants the president the authority to impose duties of up to 15 percent on imports from any and all countries for a maximum period of 150 days when addressing what the administration described as a “large and serious” balance of payments deficit.
Unlike other trade laws, this mechanism does not require prior investigations or extensive procedural steps.
The executive orders also formally ended the collection of tariffs that had been imposed under IEEPA and were subsequently invalidated by the court.
These emergency-based tariffs had ranged from 10 per cent to as high as 50 per cent, depending on the country and product category.
The temporary nature of the Section 122 tariffs means that, once the 150-day window expires, Congress would need to approve any extension.
Alongside the global levy, the administration initiated new country-specific probes under Section 301 of the Trade Act of 1974. This statute authorises the US Trade Representative to investigate what Washington considers unreasonable or discriminatory practices by foreign governments that restrict or burden US commerce.
Although the executive order did not identify the countries that would be targeted, the US Trade Representative’s office already has ongoing investigations involving China and Brazil, and the administration has indicated that other large trading partners, including Vietnam and Canada, could come under the lens.
Trump also signalled that his administration could rely on additional legal authorities, including Section 232 of US trade law, which allows tariffs to be imposed on national security grounds.
These powers have previously been used to levy duties on steel, aluminium, and certain automotive products.
The administration’s pivot to these alternative statutes had been widely anticipated, though officials acknowledged that investigations under Section 301 often take around a year to conclude.
Estimates cited by Penn-Wharton Budget Model economists suggest that approximately $175 billion in tariff revenue collected over the past year could become subject to refund claims.
Speaking to business leaders in Dallas, US Treasury Secretary Scott Bessent said that the absence of instructions from the court meant refund obligations remained contested, adding that the process could extend for an extended period through litigation.
Bessent has also sought to reassure markets that the transition to the new tariff framework would not materially alter overall revenue expectations.
He stated that the 10 per cent global levy, combined with possible future tariffs imposed under Section 301 and Section 232, would likely result in tariff collections in 2026 that are broadly comparable to what the government would have received under the invalidated emergency duties.
At the same time, he acknowledged that the Supreme Court decision had weakened the administration’s bargaining position in negotiations with trading partners.
Trump, for his part, has argued that the administration retains multiple avenues to maintain tariff pressure. “We have alternatives, great alternatives,” he said.
“Could be more money. We’ll take in more money and we’ll be a lot stronger for it,” he added.
What has changed for Indian exports to the US in tariff terms?
The latest developments have resulted in yet another recalibration of tariff levels applied to Indian goods entering the US market. Prior to the recent changes, US duties on Indian exports had fluctuated sharply over the past year.
The escalation began in April last year when the US imposed a 26 per cent tariff on Indian goods. This rate was subsequently reduced to 10 per cent, before being raised again in August to 50 per cent.
The August levy was structured as a combination of a 25 per cent reciprocal tariff and
an additional 25 per cent ad valorem duty linked to India’s imports of Russian oil.
The Russia-related component of this tariff was removed on February 6 earlier this month through an executive order after India committed to curtailing its direct and indirect purchases of Russian crude, increase its procurement of US energy products, and expand defence cooperation with Washington over the next decade.
Although the removal of the Russia-linked duty brought the effective tariff rate on Indian exports down to 25 percent,
a subsequent bilateral trade framework announced earlier this month suggested that duties could fall further to 18 per cent once a new executive order was issued and the first tranche of a trade agreement was concluded.
However, that reduction did not fully materialise before the Supreme Court struck down the reciprocal tariffs imposed under emergency authorities.
As a result of the ruling, US duties on Indian exports were effectively reset to most-favoured-nation (MFN) levels. Before the tariff escalation, the average weighted duty on Indian goods entering the US stood at around 3 per cent.
Under the new framework, most Indian exports now face this MFN baseline,
layered with the temporary 10 per cent global tariff imposed under Section 122 once it takes effect on Tuesday.
This places the effective near-term tariff burden on many Indian goods closer to 10 percent during the 150-day period covered by the executive order.
Certain exemptions are expected to continue under the revised regime. Products such as mobile phones and pharmaceuticals, which were subject to zero duties under the reciprocal tariff arrangements, are likely to retain their exempt status.
At the same time, sector-specific tariffs imposed under national security provisions, including Section 232 duties on steel and automobiles, remain in force. These measures operate independently of the temporary global levy and are not affected by the Supreme Court’s ruling on emergency powers.
The latest reset has altered the competitive landscape for Indian exporters. Under the bilateral framework announced earlier this month, India had secured a tariff rate of 18 per cent, which
was lower than the rates applied to several South and Southeast Asian economies.
Bangladesh and Pakistan were facing 19 per cent, Vietnam 20 per cent, Thailand, Indonesia and Malaysia 19 per cent each, and Sri Lanka 20 per cent.
With the reciprocal tariff structure now invalidated and replaced by a temporary global levy, this relative advantage has narrowed, reducing the margin by which Indian goods were positioned against regional competitors in the US market.
Does the ruling derail the India-US trade deal?
Despite the upheaval, Trump has repeatedly insisted
that the broader trade arrangement between Washington and New Delhi remains unaffected by the Supreme Court’s decision.
“Nothing changes on Indian trade deal, we are not paying tariffs to India and India is paying tariffs to us. We did a little flip (from the earlier situation),” Trump said, signalling that the reciprocal nature of tariff concessions between the two sides would remain intact in principle.
Trump also linked the trade relationship to India’s recent commitments on energy and defence cooperation.
“I think my relationship with India is fantastic, and we’re doing trade with India. India pulled out of Russia. India was getting its oil from Russia. And they pulled way back at my request, because we want to settle that horrible war where 25,000 people are dying every month,” he said.
Reiterating that the trade understanding would proceed, Trump added, “Nothing changes with respect to the trade deal with India,” and later emphasised, “the India deal is on… all the deals are on, we’re just going to do it,” while noting that implementation would occur “in a different way.”
The Supreme Court ruling has also raised questions about the status of numerous trade agreements negotiated under the now-defunct emergency provisions.
Trump has said that many of these arrangements would continue, while those that are abandoned would be replaced with tariffs imposed under alternative laws.
This implies that bilateral agreements, including the one with India, may need to be restructured within the confines of existing trade statutes such as Section 301 and Section 232.
From the US side, the Trade Representative has indicated that details of the new Section 301 investigations will be released in the coming days and has described these tools as legally robust.
The current US administration has been reliant on Section 301 even using it during Trump’s first term to impose wide-ranging tariffs on Chinese imports.
How may New Delhi respond?
In India, the response to the Supreme Court ruling and the subsequent US policy shift has been measured. Government sources told The Indian Express that New Delhi will monitor how Washington implements the post-ruling tariff framework before taking further steps on trade negotiations.
Although India has agreed to pursue an interim trade deal with the US as a precursor to a broader Bilateral Trade Agreement,
the interim arrangement has not yet been formally signed.
Indian officials have stated that any concessions on market access from India’s side would only be offered once the agreement is officially concluded.
Senior government officials have also indicated that delaying engagement with Washington was not considered a viable option, given that Trump personally initiated the outreach that led to the issuance of the joint statement outlining the trade framework.
According to officials, any perception that India was attempting to wait out the legal challenge to the emergency tariffs could have had adverse consequences for the bilateral relationship, reported The Indian Express.
Within New Delhi, there is also an expectation that the US administration will continue to rely on alternative legal mechanisms to impose tariffs, given the central role that trade pressure plays in Trump’s foreign policy approach.
This assessment has reinforced the view that India must prepare for continued volatility in US tariff policy, even as it seeks to advance the interim trade deal and work towards a comprehensive Bilateral Trade Agreement.
With inputs from agencies
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