US Supreme Court Rejects Trump Tariffs – Legal and Trade Policy Implications

Context

• The S. Supreme Court, in a 6–3 ruling, struck down President Donald Trump’s sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA), 1977.
• The judgment marks a critical moment in the debate over separation of powers, executive overreach, and the future of U.S. trade policy.
• The ruling has significant implications for the global economy, including countries like India, which have been directly affected by U.S. tariff measures.

Impact on India-US Trade

• The removal of tariffs will benefit approximately 55% of India’s exports to the US, which were previously subjected to an 18% duty. These exports will now only face standard Most-Favoured Nation (MFN) tariffs.
• Certain tariffs will remain:
  • Section 232 tariffs: 50% on steel and aluminum, and 25% on certain auto components.
  • Products accounting for roughly 40% of export value, such as smartphones, petroleum products, and medicines, will remain tariff-exempt.

US Supreme Court Ruling

• The court ruled that Trump overstepped his authority by imposing tariffs under the International Emergency Economic Powers Act (IEEPA), a law meant for national emergencies.
• Chief Justice John Roberts clarified that IEEPA does not permit unilateral tariff actions without congressional approval.

Recent Developments

• Following the ruling, a joint statement was issued on an interim trade agreement between India and the US.
• The US has already removed some punitive tariffs on India as a gesture of goodwill, motivated by India’s agreement to cease purchasing oil from the Russian Federation.

Future Implications

• The ruling may render recent US trade deals with countries like the UK, Japan, EU, and others ineffective, as partner countries might reconsider their validity.
• Trump could attempt to reimpose similar tariffs under different sections, but these require new investigations and could face legal challenges.
• The decision reinforces Congress’s role in trade policy, limiting presidential power to use tariffs as a broad enforcement tool.

Conclusion

• The Supreme Court’s ruling marks a pivotal constitutional correction in the United States, reinforcing the doctrine that emergency powers cannot be stretched into instruments of broad economic policy.
• For the global economy — and countries like India — the decision may reduce tariff unpredictability, but the era of strategic trade weaponisation is far from over.
• The episode underscores a larger global trend: trade policy is increasingly intertwined with national security, domestic politics, and geopolitical rivalry.

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