Trump tariff ruling could widen India’s negotiating space as trade deal may still be key

For India, the immediate impact is less about tariff reduction and more about negotiating dynamics.

• US Supreme Court limits President's emergency tariff powers
• India gains flexibility in US trade deal talks after ruling
• US can still use other laws to impose tariffs on Indian goods

Did our AI summary help?

The US Supreme Court’s decision limiting the President’s ability to impose sweeping tariffs under emergency powers could give India more room in implementing an interim deal and in negotiations toward a broader bilateral trade agreement.

India and the United States have agreed on an interim arrangement expected to cap US tariffs on Indian goods at 18 percent and provide zero-duty access for certain exports, in return for concessions from India.

The 18 percent cap stems from tariffs that were imposed by the United States under the International Emergency Economic Powers Act (IEEPA), the same authority the Supreme Court has now ruled cannot be used to levy broad tariffs.

On February 20, the Court held that IEEPA does not grant the President the power to impose sweeping duties, as the authority to levy taxes and tariffs rests with Congress under the Constitution. Tariffs imposed solely under that statute are therefore invalid.

As a result, for now, US tariffs on Indian goods would fall to MFN levels, barring those—steel, aluminium, copper, timber and auto parts—that attract steeper duties under Section 232.

However, the United States retains other statutory tools, which President Donald Trump has indicated he could use to maintain or reimpose tariffs, meaning the risk of trade restrictions is not fully eliminated and the duties may not stay at MFN levels for long.

For India, the immediate impact is less about tariff reduction and more about negotiating dynamics. With emergency-based tariff powers curtailed, the scope for sudden, across-the-board duty hikes narrows.

That could give New Delhi greater flexibility in finalising the implementation details of the interim deal and in shaping discussions toward the broader bilateral trade agreement.

Beyond the interim arrangement, both sides have committed to negotiating a more comprehensive bilateral trade agreement covering goods, services, supply chains and regulatory cooperation.

The agreement remains key, particularly as the US retains alternative statutory powers to impose tariffs, suggesting that the legal setback may not mark the end of trade tensions.