In a major development that has created uncertainty across global markets, the US Supreme Court has declared invalid the emergency law used by former US President Donald Trump to impose sweeping tariffs on multiple countries, including India, China, Canada, and Mexico. This ruling has raised serious questions about the future of US trade policy and the tariff structure currently affecting global exports.
How Trump’s Tariff Policy Began
In April last year, on the occasion of “Liberation Day” in the United States, Donald Trump surprised the world by imposing high tariffs on nearly every major trading partner. India was hit with a 26 percent tariff at that time.
A few days later, the US administration announced a 90-day waiting period, during which the tariffs were reduced to 10 percent for India and several other countries. This period was meant to allow time for trade negotiations.
However, no formal trade deal was signed between India and the US during this phase. After the 90-day period ended, Trump increased India’s tariff to 25 percent in August.
Later, citing India’s purchase of Russian crude oil, the US imposed an additional 25 percent tariff. This pushed India’s total tariff burden to nearly 50 percent.
Following preliminary announcements of a US-India trade agreement, the extra 25 percent “Russian oil” tariff was withdrawn. This reduced India’s tariff to 25 percent. Recently, after further negotiations, the tariff was officially reduced to 18 percent.
The Law Used: International Emergency Economic Powers Act
To impose these tariffs, Trump relied on a 1977 law called the International Emergency Economic Powers Act (IEEPA). This law was originally designed to deal with national emergencies and foreign threats, not for regular trade disputes.
Under this law, the President can impose economic restrictions during times of emergency. However, Trump used IEEPA without declaring a genuine national emergency and without seeking approval from Congress.
By bypassing lawmakers, his administration imposed heavy tariffs on different countries and goods, including Indian exports.
Supreme Court Ruling: Emergency Tariffs Declared Invalid
Recently, the Supreme Court of the United States ruled that the use of IEEPA for imposing trade tariffs was unconstitutional.
The court made two major observations:
First, all tariffs imposed under the emergency law were cancelled.
Second, the court clarified that only the US Congress has the authority to impose such taxes. The President cannot create artificial emergencies to justify new tariffs.
As a result, the 18 percent tariff arrangement that applied to India, Mexico, Canada, and other countries under IEEPA has now become legally invalid.
Massive Refunds to Companies
The court also ruled that all illegally collected tariffs must be refunded.
According to estimates, the US government collected nearly ₹15 lakh crore in taxes under these emergency tariffs. Thousands of companies are now preparing legal action against the US Treasury to claim refunds.
This could place significant financial pressure on the US government in the coming months.
Not All Tariffs Have Been Removed
The Supreme Court ruling does not mean that all US tariffs have ended.
Some tariffs were imposed under proper trade laws and remain fully active.
Section 232: National Security Tariffs
Under Section 232 of US trade law, tariffs can be imposed on imports that affect national security.
These tariffs are still valid and include:
Steel, aluminum, and copper at up to 50 percent
Automobiles, heavy trucks, and auto parts at 25 percent
Certain furniture, kitchen cabinets, and vanities at 25 percent
Since these goods are linked to industrial and defense security, the court has allowed these tariffs to continue.
There are strong indications that Trump may expand the use of Section 232 in the future to impose more duties.
Section 301: Unfair Trade Tariffs
Another major law is Section 301, which allows tariffs on countries engaging in unfair trade practices.
This has been used mainly against China due to issues like intellectual property violations, subsidies, and forced technology transfers.
Under this law, heavy tariffs on Chinese goods remain fully active. This situation could benefit India and Vietnam if they attract manufacturing investment shifting away from China.
Trump’s Response and New Tariffs
After the ruling, Donald Trump strongly criticized the judges and claimed that they were harming national interests.
He announced that his administration would not stop imposing tariffs.
Soon after, he introduced a new 10 percent tariff on most imports using Section 122 of the Trade Act of 1974.
Section 122: Temporary Emergency Tariffs
Section 122 allows the US President to impose temporary tariffs on countries with which the US has large trade deficits.
Key features of this law include:
Maximum tariff limit of 15 percent
Maximum duration of 150 days (about five months)
Congress approval required for extension
Using this law, Trump imposed a 10 percent tariff on almost all trading partners.
This tariff is temporary. If Trump wants to extend it beyond five months, he must get approval from Congress.
Current Situation for India
Legally speaking, the 18 percent tariff imposed under IEEPA has been cancelled.
After the ruling, India should technically face only the new 10 percent Section 122 tariff.
This means India’s tariff burden has dropped from 18 percent to 10 percent, at least for now.
However, Trump has made public statements saying “nothing changes for India” and that the 18 percent tariff will continue.
This has created confusion because the court has clearly invalidated the law used for that tariff. It remains to be seen whether the US administration finds another legal route to restore higher duties.
If no new law is used, India will remain at 10 percent for the next five months.
Current Situation for China
China was originally facing:
25 percent baseline tariff
10 percent emergency tariff
10 percent additional emergency tariff
Total: 45 percent
After the court ruling, the two emergency tariffs of 10 percent each were removed, reducing China’s burden to 25 percent.
Trump then imposed the new 10 percent Section 122 tariff.
So China now faces:
25 percent + 10 percent = 35 percent
This makes China still the most heavily taxed trading partner of the US.
European Union and Other Countries
For the European Union and many other countries, emergency tariffs have been removed.
They are now subject mainly to:
10 percent temporary tariff under Section 122
Additional Section 232 tariffs on steel and aluminum
Exports in these categories will continue to face high duties.
What Lies Ahead
The global trade environment remains uncertain.
India may benefit if manufacturers shift away from China due to higher tariffs. However, this depends on how effectively India improves its infrastructure, policies, and ease of doing business.
Trump is likely to continue exploring alternative legal provisions to impose tariffs. Future policy changes will depend heavily on Congressional approval and court interpretations.
For now, India enjoys temporary relief, China continues to face high pressure, and global companies remain cautious due to policy unpredictability.
Conclusion
The US Supreme Court’s ruling has reshaped global trade dynamics by limiting presidential power over tariffs. While emergency tariffs have been cancelled, legally justified trade barriers remain in place.
India’s tariff burden has temporarily reduced to 10 percent, China continues to face heavy duties, and the European Union remains affected by sector-specific tariffs.
As legal battles and political negotiations continue, businesses and investors worldwide will closely watch how the US trade strategy evolves in the coming months.
Disclaimer
This article is published for informational and educational purposes only. It is based on publicly available reports, statements, and analysis at the time of writing. The views expressed in this article do not constitute financial, legal, or investment advice. Readers are advised to consult qualified professionals before making any business or investment decisions. The publisher is not responsible for any losses arising from the use of this information.
