What the Supreme Court's Tariff Ruling Means for India's Exports

The US Supreme Court did something that months of diplomatic negotiations, retaliatory tariffs, and trade talks had failed to do. It struck down the legal foundation of much of Trump’s trade war.

The world, including India, is now assessing what comes next.

What Happened in Court?

Trump had been using the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on nearly every country.

The US even imposed a 10% tariff on Antarctica, despite it exporting no goods to America. Critics mocked this as evidence that the tariff order was applied mechanically.

In a 6–3 ruling, the Supreme Court struck down the tariffs.

Out of nine justices:

• Six voted to strike down the tariffs

• Three voted to uphold them

Notably, two of the six justices in the majority, Neil Gorsuch and Amy Coney Barrett, were nominated by Trump.

Chief Justice John Roberts wrote that IEEPA was designed for genuine emergencies such as terrorism or foreign threats. It was not intended to serve as a permanent trade policy tool. The law does not mention tariffs or duties.

What About the $160 Billion Already Collected?

Between April 2025 and February 2026, the US collected over $160 billion in tariffs under IEEPA.

This included payments from:

• Indian exporters

• American importers

• Businesses across global supply chains

The Supreme Court ruling declared this collection illegal.

Will Importers Get Refunds?

Technically, yes.

Importers have 180 days to file protests and seek refunds from US Customs. The matter has been sent back to the Court of International Trade, where nearly 2,000 importers had already filed cases.

However:

• The administration has indicated refunds will not be issued voluntarily.

• Officials have suggested the matter could remain in court for years.

As a result, the funds remain in legal limbo.

What Happens to the India–US Trade Understanding?

Two weeks before the ruling, India agreed to stop entering new contracts to buy Russian oil as part of a trade framework.

In return, the US lifted a 25% Russia oil penalty.

After the ruling, the legal basis for that penalty was invalidated.

Legally, India is not bound by a treaty. The understanding was diplomatic, not contractual.

However, reversing course publicly could complicate ongoing negotiations. For now, India appears to be keeping its options open.

How Big Was the Tariff Burden on India?

At its peak, India faced an effective tariff burden of nearly 50%, including:

• 10% baseline tariff

• 15% country-specific reciprocal tariff

• 25% Russia oil penalty

The Supreme Court ruling removed the legal basis for most of this structure.

The Immediate Response: Section 122

Following the ruling, Trump announced new tariffs under Section 122 of the Trade Act of 1974.

Initially set at 10%, the global tariff was later raised to 15%, which is the statutory maximum.

Why Section 122 Matters

Section 122 allows tariff imposition during a balance of payments emergency.

However, it expires after 150 days.

This means the 15% global tariff is temporary unless extended by Congress.

For countries negotiating trade agreements, including India, this 150-day window has become critical.

India’s Official Response

India responded cautiously.

A delegation led by chief negotiator Darpan Jain postponed its planned trip to Washington.

Finance Minister Nirmala Sitharaman stated that it was too early to comment and that the Commerce Ministry was reviewing the situation.

She also reaffirmed that India’s broader trade agenda with other countries remains active.

The Solar Tariff Twist

On February 25, the US Commerce Department announced preliminary countervailing duties of 126% on solar panel imports from India.

Mundra Solar received a rate of 125.87%.

This action was unrelated to the Supreme Court ruling. It stemmed from a petition by American solar manufacturers alleging subsidised imports.

India, Indonesia, and Laos together accounted for 57% of US solar module imports in the first half of 2025.

Final determinations are expected in September and October 2026.

The move introduced fresh uncertainty into trade discussions.

Where Things Stand Now

India’s position today is mixed.

Improvements include:

• Removal of the Russia oil surcharge

• Invalidation of the reciprocal tariff

• Reduction of peak tariff exposure

Current exposure includes:

• 15% global tariff under Section 122

• Sector-specific tariffs under Section 232 on steel, aluminum, and auto parts

The interim trade framework, involving $500 billion in planned US purchases over five years, remains under discussion, but talks are paused.

What Happens Next?

The administration is expected to pursue:

• Section 232 national security investigations

• Section 301 unfair trade practice investigations

These authorities provide longer-lasting tariff powers.

The 150-day Section 122 window is now central to negotiations.

The Supreme Court ruling did not end the trade conflict. It changed its legal structure.

India’s next steps will unfold within this revised framework.