Trump tariff ruling brings legal clarity, not a market rally: Market experts

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• US Supreme Court strikes down Trump's emergency tariffs
• Markets see little impact as tariff uncertainty persists
• India sees legal relief but trade volatility remains

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The US Supreme Court’s February 20 ruling striking down President Donald Trump’s emergency tariffs has delivered legal clarity, but little excitement for markets already numbed by months of tariff flip-flops and policy noise.

While the verdict dismantles the legal basis of the so-called “Liberation Day” tariffs imposed under the International Emergency Economic Powers Act (IEEPA), investors appear to be treating it less as a turning point and more as another chapter in a trade war that refuses to end cleanly. In other words, the relief is real but largely priced in.

“The factory setting was zero tariff. Then it went to 50%, markets corrected. Then it was dialled down to around 18%, markets rejoiced,” said Siddharth Bhamre of Asit C Mehta. “Now, based on what the Supreme Court has said, ideally markets should rejoice again. But then that would mean markets never found the deal to be good enough. So how do you justify the rejoice? I’m not expecting anything significant that wasn't already priced in.”

What the court changed — and what markets already knew

The US Supreme Court ruled 6-3 that the Trump administration exceeded its authority by using an emergency law to impose broad, country-specific tariffs, drawing a sharp constitutional line between emergency powers and taxation.

Ritesh Jain, founder of Pinetree Macro, said the ruling effectively pulls the legal rug from under Trump’s trade strategy. “The Supreme Court has struck down Trump’s emergency tariffs under IEEPA. The legal foundation for his trade war has crumbled,” he said.

But for markets, the more important takeaway is what hasn’t changed.

“He still has plenty left in the toolbox: Section 301, Section 232, new legislation, bilateral pressure,” Jain said. “The trade war isn’t over. It will just get more creative.”

India: relief on paper, caution on positioning

For India, the ruling removes the legal basis for the reciprocal and Russia-linked tariffs that had pushed effective duties on a large chunk of exports to punitive levels.

According to Nomura, nearly 60% of US imports from India had been facing a combined 50% tariff, translating into an average effective rate of about 33.6%.

That pressure was visible in trade data. US-bound shipments fell sharply through mid-2025 before stabilising, with exports dropping from about USD 8.8 billion in May to roughly USD 5.5 billion by September. Some recovery followed (exports rose about 22% in November) but volumes remained volatile.

Commerce minister Piyush Goyal had earlier flagged front-loading of shipments ahead of tariff deadlines, suggesting that part of the resilience reflected timing rather than a full recovery in demand.

For investors, that context matters. Much of the damage to supply chains, margins and sentiment has already occurred.

“All that this episode adds to is further disruption of global trade,” Bhamre said. “The uncertainty itself has been the bigger cost.”

Refunds, deficits and the macro cross-currents

One area where the ruling could still move the needle is cash flows.

Jain expects refund claims to gather pace. “There is a strong chance of USD 50 to 100 billion in tariff overpayments being refunded in the near term,” he said — a development that could support corporate balance sheets and consumer spending in the US.

Ajay Bodke, independent research analyst, said refund litigation is likely to persist even if tariffs return through other routes. “Even if Trump uses other Sections to reimpose tariffs, court cases demanding refunds under IEEPA will still have legal basis,” he said.

At the macro level, Jain warned that the loss of tariff revenue could widen US fiscal deficits, reinforcing demand for inflation hedges and real assets — a factor markets may watch more closely than trade flows themselves.

Politics intrudes, uncertainty lingers

Bodke also pointed to the political backdrop. With Republicans holding a wafer-thin majority in the House and falling well short of a two-thirds majority in the Senate, resistance to indiscriminate tariffs is growing, even within Trump’s own party.

“This ruling is bound to embolden free-trade advocates,” he said, though he cautioned that policy uncertainty is far from over.

The Supreme Court may have closed one legal door, but the trade war has not ended, it has merely changed shape.

Trump says he'll use other legal authorities to impose global tariffs if struck down like the Trade Act of 1974 and Trade Expansion Act of 1962. So this isn't over yet.