A landmark ruling by the US Supreme Court has reshaped the trajectory of President Donald Trump’s tariff policy, striking down the legal foundation he used to impose sweeping country-specific duties including those affecting India and prompting the White House to introduce a new uniform 10 per cent tariff on imports.
In a six-to-three decision, the conservative-majority court ruled that the 1977 International Emergency Economic Powers Act (IEEPA) does not authorise a president to unilaterally impose tariffs. Chief Justice John Roberts, writing for the majority, stated that the law “contains no reference to tariffs or duties,” and that Congress would have expressly granted such extraordinary authority if it intended to do so.
The judgment marks one of the most significant judicial setbacks for Trump since his return to office 13 months ago. It directly challenges a cornerstone of his economic strategy, which relied heavily on tariffs as leverage in global trade negotiations.
Immediate Policy Response
Within hours of the verdict, Trump signed a new executive order imposing a flat 10 per cent duty on imports entering the United States. The White House confirmed that the revised tariff would take effect from February 24 and remain in force for 150 days.
Under the updated framework, countries that had previously negotiated specific tariff arrangements with Washington including India will now be subject to the standard 10 per cent rate, even if earlier agreements had stipulated higher or differentiated duties.
A White House official told AFP that while the new 10 per cent duty will apply broadly, the administration intends to explore mechanisms to “implement more appropriate or pre-negotiated tariff rates” in the future.
Certain sectors remain exempt, including goods covered under the US-Mexico-Canada Agreement and industries under separate national security probes, such as pharmaceuticals.
Implications for India-US Trade
Earlier this month, India and the United States had announced a framework for an interim trade agreement. As part of that arrangement, Trump removed a 25 per cent punitive tariff tied to India’s purchase of Russian oil and reduced reciprocal duties from 25 per cent to 18 per cent.
With the introduction of the uniform 10 per cent tariff, Indian exports to the US will now be taxed at the lower rate, effectively superseding the previously negotiated 18 per cent figure.
Speaking at the White House after the court’s ruling, Trump insisted that the bilateral trade relationship remains intact.
“The India deal is on… all the deals are on. We’re just going to do it in a different way,” he said.
He added that while trading partners will continue paying tariffs, the United States would not face reciprocal duties under the revised structure. “Nothing changes,” he maintained, despite the legal shift.
Market and Political Reaction
Financial markets responded positively to the clarity provided by the court decision. Wall Street indices posted modest gains, reflecting investor relief that tariff uncertainty may ease in the near term.
Business groups welcomed the ruling. The National Retail Federation described the judgment as providing “much-needed certainty” for companies navigating global supply chains.
Treasury Secretary Scott Bessent told the Economic Club of Dallas that the alternative tariff mechanism would result in “virtually unchanged tariff revenue in 2026,” signalling that the administration intends to maintain fiscal inflows despite the legal constraints.
However, the decision leaves unresolved questions around refunds for duties already collected under the invalidated framework. The administration had argued in court that refunds would be issued if the tariffs were struck down, but the Supreme Court’s ruling did not directly address that matter.
Justice Brett Kavanaugh, the sole Trump appointee to side with the President in the case, acknowledged that the refund process could prove complicated.
The University of Pennsylvania’s Penn Wharton Budget Model estimated that potential refunds could total up to $175 billion, should courts determine that repayment is required.
Broader Legal Context
The ruling did not affect sector-specific tariffs on steel, aluminium and certain other goods imposed under separate legal authorities. Ongoing national security investigations could still result in targeted duties.
Still, legal scholars describe the judgment as a significant reaffirmation of Congressional authority over trade policy. By limiting executive power under the IEEPA statute, the court effectively reasserted legislative primacy in tariff matters.
The majority opinion emphasised that while the President retains emergency powers in economic matters, imposing broad tariffs requires explicit statutory backing.
Trump reacted sharply to the verdict, criticising the justices who ruled against him and suggesting that foreign interests had influenced the outcome an allegation for which he offered no evidence.
Consumer and Global Impact
According to Yale University’s Budget Lab, the average effective US tariff rate following the decision now stands at 9.1 per cent down from 16.9 per cent under the earlier regime but still the highest level since 1946, excluding 2025.
For consumers, the reduction may modestly ease price pressures, though analysts caution that global supply chains remain vulnerable to policy volatility.
International partners, including the European Union and Britain, have indicated they are reviewing the implications of the court’s decision for ongoing negotiations.
For India, the shift presents a mixed picture: lower immediate tariff exposure but renewed uncertainty about long-term bilateral trade arrangements.
As litigation over potential refunds and alternative tariff mechanisms unfolds, the ruling underscores the complex interplay between executive authority, legislative oversight and global commerce in an era of economic nationalism.
