Why US Supreme Court’s Tariff Ruling Is Both Relief and Risk for India

The action in Washington on Friday last week looked like a legal theatre for many, but for exporters in Surat, Tiruppur or Moradabad, it landed more like a spreadsheet shock. A tariff line you’d priced into an order suddenly became unlawful, then reappeared under a different name.

The US Supreme Court has struck down President Donald Trump’s sweeping “emergency” tariff regime. For India, the decision offers both a momentary reprieve and a pointed warning.

US Supreme Court Ruling

The Court’s core holding was narrow but powerful. The International Emergency Economic Powers Act (IEEPA) — a 1977 law used mostly for sanctions — does not authorise the President to impose tariffs. Tariffs are taxes on imports; the Constitution places taxing power with Congress, and the Court said the White House could not conjure a global tariff regime out of IEEPA’s wording about “regulating… importation”.

This matters because Trump’s “reciprocal” tariff architecture had been built on IEEPA-style emergency logic: declare a national emergency (trade deficits, drug trafficking, etc.), then levy broad duties across partners. The Court effectively pulled out that foundation.

But the ruling doesn’t end America’s tariff story. It simply says: not like this, not under this law.

India's Position

India was not a side character in this tariff saga. Under Trump’s April 2, 2025 “reciprocal tariff” order, India was listed at 25%. That figure became part of the pricing backdrop for everything from textiles and gems to engineering goods.

Tensions escalated further in 2025 when Trump announced an additional 25% tariff on Indian goods, explicitly linking it to India’s purchases of Russian oil. A move that placed India at the top of the tariff hit countries with 50% duties.

The Supreme Court decision knocks out the IEEPA-based pieces of that structure. Practically, that means the legal authority used to justify the broad emergency tariffs has been declared invalid — and the US customs system now has to stop collecting those specific duties.

Are Indian Exports Safe

Not exactly. Here’s the twist that matters for India: within hours of the ruling, Trump moved to replace the struck-down tariffs with a temporary, across-the-board import duty under a different statute — Section 122 of the Trade Act of 1974, which allows a tariff of up to 15% for up to 150 days in certain balance-of-payments scenarios.

Earlier this month, Trump already announced an interim deal with India, which lowered tariffs on Indian goods to 18% from the earlAsr 50%.

As per reports, US Customs and Border Protection will halt collections of the IEEPA tariffs from 12:01 a.m. ET on Tuesday, while the new 15% global tariff is being used as the stopgap replacement.

So, for India, the immediate reality is not “tariffs are gone”. Even if it did so, just gave a 3% relaxation. It’s more like a volatile, country-targeted regime has been reset into a flatter, temporary one — at least for now.

A quiet bombshell the is money collected so far. Reuters, citing the Penn-Wharton Budget Model, said the ruling makes more than $175bn in tariff revenue potentially subject to refunds, and that the IEEPA tariffs were generating over $500mn a day in gross revenue.

Because refund fights shape behaviour. If American importers start aggressively pursuing claims, they will also become more cautious about signing long-dated purchase contracts that rely on “today’s” tariff interpretation, which could lead to delayed orders as experts predict.

Silver Linings

It reminds Indian businesses of a hard truth: the US is now a high-policy-risk market, where the legal basis for tariffs can change faster than a production cycle.

However, not all are in grey. There are silver linings, too. It temporarily shifts India from a world of steep, partner-specific duties into a world of a time-limited 15% blanket charge with a ticking 150-day clock, providing a level playing field.

Notably, India’s export performance had remained resilient even under elevated tariff conditions. Rubix Data Sciences estimates that exports to the US stood at $25.5bn during September-December 2025, compared with $25.8bn during the same period in 2024. The removal of higher reciprocal tariffs, despite the temporary duty, improves the relative outlook compared with the earlier tariff regime, it added.

"The US-India Joint Statement dated Feb 6, 2026 mentions, “In the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments”. Now US tariffs have changed, India should use this clause to either opt out of the or delay negotiations or seek fresh terms so the trade deal loo equitable," Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), pointed out.

Protectionist instincts in Washington remain intact, but they are now operating within clearer, time-limited legal structures. The White House has signalled that tariffs will stay central to Trump’s strategy for “protecting American” interests.

For India’s exporters, the message is sobering: the legal basis may shift, but the politics of tariffs will not fade any time soon.