US Supreme Court strikes down emergency tariff powers; Indian goods that faced nearly 50% duties months may now carry just 10% as export economics transform overnight
The US Supreme Court delivered a 6-3 ruling Friday that fundamentally rewrites the economics of exporting to America.
For Indian companies, the journey has been dramatic: tariffs that peaked at 50% last year, dropped to 25%, then 18% through negotiations, may now come down further. Of course, some clarity still needs to emerge on the final tariff structure but suffice it to say that much of the Trump Tariff narrative will change for the better.
The Indian markets surged with SGX Nifty jumping over 320 points, and it may well moderate, but let’s trace the tariff trajectory that made this relief so significant.
How We Got Here: The Tariff Escalation
In April 2025, Trump launched what he called Liberation Day. Using the 1977 International Emergency Economic Powers Act—a law designed for freezing assets during crises like the Iran hostage situation—he declared US trade deficits an extraordinary threat to national security. That emergency declaration gave him authority to impose sweeping tariffs without Congressional approval.
India initially faced reciprocal tariffs as high as 50% on certain product categories as Trump aimed to match what he claimed other countries charged American goods. The rates varied by sector, but the effect was devastating: Indian exporters saw their US market access costs explode overnight. Long-term contracts became impossible to price. Orders dried up as US importers switched to suppliers in countries with lower tariff exposure.
By late 2025, intensive bilateral negotiations brought some relief. The headline rate for most Indian goods dropped to 25%. Then, just two weeks ago, a US-India interim trade framework cut it further to 18% for most products, with promises of zero tariffs on pharmaceuticals and certain other categories once the deal was finalized.
But all of those rates—50%, 25%, 18%—rested on the same legal foundation: Trump’s emergency powers declaration. Friday, the Supreme Court ruled that foundation unconstitutional.
What the Court Actually Ruled
Chief Justice John Roberts, writing for the 6-3 majority, declared that the International Emergency Economic Powers Act does not authorize unilateral presidential tariffs. The Constitution clearly assigns the power to levy taxes—including tariffs—to Congress, not the executive branch.
Roberts wrote that two words in the 1977 law mentioning regulating importation cannot bear the weight of granting unlimited presidential authority to impose tariffs on any country, any product, at any rate, for any duration. No president had ever used this emergency law to impose tariffs in its 48-year history before Trump.
The ruling invalidates roughly $175 billion in duties collected since Liberation Day. More importantly for Indian exporters, it kills the entire emergency tariff structure.
Trump’s Immediate Response
Within hours of the ruling, Trump announced a replacement: a 10% global tariff imposed under Section 122 of the Trade Act of 1974. This rarely-used statute allows the president to impose duties up to 15% for up to 150 days to address trade imbalances, though it requires Congressional approval for any extension beyond that period.
So the current state for Indian exporters: goods that faced 18% tariffs Friday morning (under the interim framework), now face lower tarrifs.
Beyond the Numbers
The Supreme Court ruling provides something Indian exporters haven’t had in ten months: predictability. The emergency powers mechanism created constant whiplash—tariffs announced, delayed, modified, reimposed based on presidential declarations and bilateral negotiations that could shift overnight.
Trump’s 10% replacement tariff under Section 122 expires after 150 days without Congressional renewal. In a divided Congress where even Republicans showed limited enthusiasm for the emergency tariff regime, that renewal is unlikely. While Trump can deploy other trade laws for sector-specific duties, none provide the sweeping unilateral authority to impose economy-wide tariffs that the emergency powers gave him.
The Market On Steroids?
SGX Nifty’s 320-point jump captured instant recognition that a major constraint on Indian export competitiveness just lifted. Export-oriented mid-caps in pharma, textiles, chemicals and engineering had traded under pressure since Liberation Day, unable to plan or invest given tariff volatility.
Foreign institutional investors who turned net buyers in February after months of outflows now see validation. The export headwind that pushed many to underweight India-exposed sectors just converted to a tailwind.
Large-cap indices benefit less directly given domestic earnings focus, but improved sentiment helps. IT services don’t face goods tariffs but benefit from reduced US-India trade friction.
The rupee held near 90 to the dollar, suggesting currency markets view this as tariff relief rather than a balance of payments transformation. But for equity investors focused on earnings power, the shift from 18-25% tariffs (and peak 50% rates) to a stable 10% baseline represents is a huge positive.
What Comes Next
Trump can still deploy other tariff authorities. He can launch Section 301 investigations targeting specific unfair trade practices. He can expand Section 232 national security tariffs beyond steel and aluminum. He can negotiate bilateral frameworks with different terms.
But the constitutional reality just changed: unilateral economy-wide tariffs imposed through emergency declarations are dead. Congress holds the power to levy taxes including tariffs. If Trump wants sweeping tariff authority, he needs explicit Congressional legislation—unlikely in the current political environment.
For Indian exporters who endured the rollercoaster, the message is clear: the worst is over.
For markets in India and worldwide, what died was the uncertainty and the fear of waking up to another Trump tariff tweet.
