Trump Tariff Relief...Not Yet!

Trump Tariffs Struck Down: Will It Benefit India?

The US Supreme Court's decision to strike down President Donald Trump's sweeping tariffs may have brought major relief to countries including India, but a long road still lies ahead.

President Trump hit back in defiance, calling the 6-3 majority verdict "ridiculous" and immediately announcing a new executive order imposing a 10% global tariff under Section 122 of the Trade Act of 1974. This section allows for a temporary import surcharge for 150 days (capped at 15%), with any further extension requiring Congressional approval.

Why the Court Ruled Against Trump

The Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA), a 1977 law intended for national emergencies, did not give Trump the authority to impose the tariffs.

What It Means for India

But what does this mean for India, which issued a joint statement with the US about an interim trade agreement on February 7? According to a CNBC report citing White House sources, all countries with trade agreements will now drop to a 10% tariff rate, replacing the IEEPA duties.

Meanwhile, since the tariffs took effect in early 2025, the US Treasury has collected an estimated $175 billion in duties now deemed unconstitutional, raising questions over refunds to importers.

More Tariff Measures Could Follow

This may not stop President Trump from adopting more measures, with various reports suggesting he may use Section 301 and Section 232 to impose more sectoral tariffs. The Supreme Court decision does not apply to sectoral tariffs like steel, aluminium, and automobiles. However, those statutes require new investigations and public justification, delaying action and inviting further legal challenges. Such measures also cannot serve as a universal enforcement tool, said Delhi-based think tank Global Trade Research Initiative (GTRI).

India Should Reassess Its Trade Deal: GTRI

GTRI has also said that India should reassess its trade agreement with the United States following the Supreme Court ruling, even as Indian officials are due to travel to Washington on February 23 to finalise the agreement's text.

Tax Experts Welcome the Move

Meanwhile, tax experts have welcomed the Supreme Court ruling. The decision brings significant legal clarity and reduces tariff uncertainty for India, reinforcing limits on unilateral tariff actions, said Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat.

"Notably, under the interim trade arrangement, the US had agreed to reduce reciprocal tariffs on India to 18%, which shall no longer remain relevant following the Court's decision. Any attempt to levy such tariffs would now require Congressional approval. This is likely to give much-needed relief and a competitive boost to Indian exporters," he added.

Krishan Arora, Partner and Indirect Tax Leader, said: "While in recent times President Trump has been negotiating tariff reductions, this decision would provide much-needed relief to global trade with the US. India was one of the worst hit, with tariffs as high as 50%, which had recently come down to 18%."

Section 232 Tariffs May Endure

Both experts note that Section 232 tariffs may endure despite the ruling, and this remains a key area to watch as India and the US continue trade negotiations.

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