In a surprising legal victory that is reshaping global trade, the U.S. Supreme Court has struck down the sweeping tariffs imposed by former President Donald Trump, handing a notable reprieve to major exporters such as China and India.
The court ruled on Friday that Trump exceeded his authority when he used emergency powers to impose broad import duties on goods from around the world — a strategy that had rattled markets and strained diplomatic ties. It found that the International Emergency Economic Powers Act (IEEPA) does not grant the president the power to levy tariffs without explicit approval from Congress.
What This Means for Trade with China and India
Under the previous tariff regime, tariffs on imports from China had climbed sharply, squeezing exporters and disrupting global supply chains. Following the court’s decision, effective duties on Chinese goods heading into the U.S. have fallen significantly — offering relief to manufacturers and traders who had seen costs rise.
For India, the implications are equally striking. A large share of Indian exports was facing “reciprocal” tariffs of up to 18–25% under Trump’s policy. With the court’s decision, many of those levies have become unenforceable — potentially removing barriers on roughly half of India’s shipments to the U.S. market and bolstering competitiveness for Indian firms.
Economists now estimate that the average tariff on imports into the U.S. will be closer to the lowest levels seen since Trump first rolled out his so-called “Liberation Day” tariffs, reversing much of the trade cost inflation triggered by the earlier measures.
A Shift in Global Trade Dynamics
The court decision marks a rare rebuke to Trump’s trade agenda and has injected fresh uncertainty into U.S. policymaking. While the White House has responded with plans to pursue new tariff authorities under different laws, analysts say the legal precedent set by the ruling could limit the use of broad, unilateral trade measures in the future.
Countries such as Brazil also stand to benefit from the ruling, as lower duties could encourage higher exports to the U.S. market. At the same time, some trading partners that had negotiated lower tariffs under earlier frameworks — including the UK and Australia — may lose out as the new across-the-board rate reshapes competitive dynamics.
Despite the immediate relief for exporters, uncertainty remains. The Trump administration is expected to explore other legal avenues to impose targeted tariffs, such as sector-specific duties under national security provisions. That could mean tariffs on steel, aluminum or other sensitive industrial sectors stay in place even as broad reciprocal duties have been struck down.
Market and Policy Ripple Effects
The ruling has already had knock-on effects in financial markets and trade talks. Global investors reacted to the news with movements in currencies and stock markets amid shifting expectations of future trade costs. In New Delhi and Beijing, officials are assessing how best to leverage the ruling to protect and grow their export sectors.
For New Delhi, in particular, the decision could reshape ongoing negotiations with Washington over a broader trade deal — although India has reportedly paused some talks as both sides recalibrate in light of the ruling.
