Tariff Shock Nullified, For Now

JANUS VIEW

Trump’s Tariff Strategy Unravels In Court, But The Trade War Isn’t Over

The US Court of International Trade has ruled that the reciprocal tariffs announced by President Trump on April 2—subsequently suspended, negotiated, and adjusted with select trading partners—are all illegal. The administration now has 10 days to roll back the tariffs already announced.

Stock market indices in the US moved up. The world heaved a sigh of relief over this initial sign that the US has not yet deformed into a tinpot dictatorship, in which one man’s will could change the national paradigm wholesale, and that institutional checks and correctives remain in the system. But it would be a mistake to assume that Trump’s tariff tantrums have now become an unpleasant part of history.

There are three elements to the logic of the court’s ruling. The reciprocal tariffs were announced under emergency powers derived from the International Emergency Economic Powers Act. The Court found that a case for national emergency had not been established by the Trump administration (IEEPA).

The court also found that the law, enacted in 1977 to limit and clarify the sweeping powers previously granted to the President under earlier statutes like the Trading with the Enemy Act of 1917—which was used to confiscate property and impose sanctions—contains no specific provisions related to tariffs. Considering the administration’s failure to establish the case for a national emergency, tariff-setting powers stay with Congress, and cannot be delegated to or arbitrarily assumed by the President.

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CORE NUMBER

Rs 36,000 crore

That is the total value of frauds reported by Indian banks in FY2024–25, triple the amount from the previous year (Rs 12,230 crore), according to the Reserve Bank of India’s latest annual report. Most of the frauds stemmed from loans, not digital payments. The jump includes Rs 18,674 crore from 122 older cases reclassified as fraud after a court order. Frauds in private banks surged by 270%, while public sector banks saw a 177% rise. Digital frauds fell to Rs 520 crore, even as UPI transactions soared 30% to Rs 260 trillion.

RBI’s Record Year. The Reserve Bank of India reported a 27.5% jump in net income to Rs 2.69 lakh crore in FY2025, mainly due to gains from foreign exchange trades and rising interest on overseas securities. It earned Rs 1.11 lakh crore from forex transactions and Rs 97,007 crore from foreign securities. The RBI’s balance sheet grew 8.2% to Rs 76.25 lakh crore. Last week, it approved a record surplus transfer to the government. Total spending rose to Rs 69,714 crore, driven by higher interest costs, staff expenses, and note printing.

Project Delays Hit Growth! India’s Rs 86,000 crore construction equipment industry grew just 3% in FY25, sharply down from 24% in FY24, due to election-related project delays, slow payments to contractors, and muted demand. The sector, vital for infrastructure development, was hit by stalled road and mining projects. Indian Construction Equipment Manufacturers' Association, the industry body, flagged the election model code and execution lags as key hurdles. Leaders from Caterpillar, JCB, Tata Hitachi, and Volvo CE urged faster payments and policy support. Despite current challenges, companies remain optimistic, eyeing incentives and GST cuts to revive demand and boost infrastructure momentum post-elections.

Value Over Volume. In FY2025, India’s organised gold jewellery sector saw a 28% rise in revenue, primarily driven by a 33% jump in gold prices, even as volumes fell by 7%. The trend is expected to continue into FY2026, with value growth projected at 12–14% despite a 9–10% decline in consumption volumes, according to ratings agency ICRA. This comes amid gold prices currently trending nearly 20% above FY2025 averages, reflecting investor interest in safe-haven assets. While demand for bars and coins is expected to grow 10%, organised jewellers are banking on price-driven growth, retail expansion, and cultural demand, even as higher financing costs limit net margin gains.

The Haunting Spectre of AI. The CEO of Anthropic, an American AI startup, says that he thinks companies are sugarcoating the impact of AI and that AI could eliminate 50% of entry-level white-collar jobs and increase unemployment by 10-20% within the next five years. In fact, that’s already happening too; last year, tech companies in the US had many brutal layoffs and hired a record low (7% in 2024 versus 25% in 2023) number of early-career candidates. Even in India, an IIM-Ahmedabad study found that 60% of white collar workers feared job loss because of AI. 

THE SIGNAL DAILY

How Friendly Are Pet-friendly Hotels?

Imagine this: you’re the pet parent of a relatively well-behaved dog. It’s been a few months since you took a real vacation from work, so you decide to get away for a week. Luckily, you come across a resort in the hills, which advertises itself as “pet-friendly.”

But when you actually arrive at your destination you find out that you can’t take your pet out of your room. That’s the state of a lot of so-called ‘pet-friendly’ hotels in India right now. 

In the latest episode of The Signal Daily, we’ll learn about the ‘pet-friendly’ hospitality industry. How friendly are these properties, really?

The Core produces The Signal Daily. Follow us wherever you get your favourite podcasts. Click here to check out the rest of our work.

PODCAST

On Episode 594 of The Core Report, financial journalist Govindraj Ethiraj talks you through the top business news of the day. We also feature excerpts from our interviews with Ram Singh, economist and Director of the Delhi School of Economics (from our podcast series How India’s Economy Works hosted by Puja Mehra) as well as an excerpt with from our upcoming Weekend Edition featuring Dr. Kailash Sharma, Dean Academics (Projects) at Tata Memorial Hospital.

• Markets close up after uncertain session

• More economists are betting on an interest rate cut

• Don’t pop the champagne on the court freeze on Trump tariffs yet

• India’s highest tax payers are not those you think they should be

• Cancer cases in India are rising and the rising number of hospitals are not able to cope

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas