The US Supreme Court has ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs. This decision eliminates the reciprocal tariffs imposed so far, but it is not a reversal of US trade policy. For India, the importance of recent trade deals has increased.
The US Supreme Court ruling has narrowed one pathway for executive tariff action but has not eliminated tariff authority. Tariffs imposed under Section 232 on steel and aluminium and under Section 301 for unfair trade practices remain unaffected. The ruling also leaves open a Pandora’s box of non-tariff tools—embargoes, licensing requirements, and transaction bans—that can be used to curtail trade.
Within hours of the judgment, Donald Trump announced a uniform 10 per cent global tariff and then raised it to 15 per cent under Section 122. Paradoxically, the three primary targets—Brazil, China, and India—have seen the largest reductions in their tariffs, while some that had struck deals appear to face higher barriers. Trump has referred to other “methods, practices, and statutes” that could be used to impose tariffs “higher than before”. Executive orders signed that night directed the Office of the US Trade Representative to initiate investigations into “unreasonable” and “discriminatory” trade practices under Section 301.
The Section 122 tariff can be imposed for 150 days and extended further only with congressional approval, creating a rolling cliff edge. The ruling has unambiguously deepened uncertainty, as other authorities will be invoked in sequence, challenged in court, and either upheld or struck down. Trade policy risk has become episodic, legalistic, and harder to price.
How should India interpret this? Its recent trade deals have become more valuable. A bilateral agreement with the US, anchored in treaty law, cannot be undone by a single ruling or executive order. The agreement with the EU is consequential for market size and stability. In recent deals, India has reduced tariffs across a wide range of products, recognizing that imports are necessary for exports and growth. In a world of persistent uncertainty, India’s strategy should be openness and predictability to leverage opportunities.
