First 50% to 18%, now 10% to 15%: How US Supreme Court ruling forced Trump tariff reset and why India stands to gain

(FILES) US President Donald Trump (R) and Indian Prime Minister Narendra Modi arrive for a joint press conference in the East Room at the White House on February 13, 2025 in Washington, DC. (Photo by Andrew Harnik / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

The US Supreme Court struck down Trump’s tariffs, leading to a new 15% global levy. India benefits as its exports face lower, predictable tariffs, with key sectors exempt. Refunds for past tariffs remain unresolved, and the new regime brings stability for India.

Did our AI summary help?

The global trade landscape shifted dramatically over a single weekend after the US Supreme Court struck down President Donald Trump’s sweeping tariffs imposed under emergency powers, only for the White House to roll out a fresh global levy hours later.

What followed was a rapid escalation. After calling the ruling a “terrible decision", Trump signed a proclamation on Friday introducing a 10 percent global tariff. By Saturday, he raised it further, announcing on social media that the rate would be increased to the statutory maximum of 15 percent.

Trump defended the move, insisting his administration has “great alternatives" that could generate “more money" and make the United States “a lot stronger". He also lashed out at the judiciary, saying he was “ashamed" of the conservative judges who ruled against him and branding the liberal wing a “disgrace".

Despite the political drama, the outcome creates a meaningful reset for many economies, especially India.

What has changed after the Supreme Court ruling

On Friday morning, the Supreme Court ruled 6–3 that Trump had overstepped his authority by using the International Emergency Economic Powers Act to impose tariffs.

The court held that the Constitution gives Congress, not the president, the power to impose taxes and that the emergency law was meant for regulating commerce during crises, such as sanctions, not for raising revenue. This immediately invalidated tariffs that had gone as high as 50 percent for some countries.

By Friday afternoon, Trump responded by invoking a completely different law, Section 122 of the Trade Act of 1974, a statute that had never been used before. This provision allows the president to impose temporary tariffs to address “large and serious" balance of payments deficits.

The key difference is that Section 122 caps tariffs at 15 percent and limits them to 150 days unless Congress explicitly approves an extension.

Why India stands to gain

For India, the shift represents a clear improvement.

Until now, Indian exports were facing steep reciprocal tariffs, with some goods hit by duties as high as 50 percent, particularly those linked to India’s purchase of Russian oil. Under the new framework, India’s effective tariff exposure will drop sharply.

According to reports cited by The Indian Express, India’s effective incidence of duties is now set to fall to a flat 15 percent starting February 24. This means that roughly 55 percent of India’s exports to the United States will be freed from the earlier punitive rates and revert to standard tariffs plus the 15 percent surcharge.

While 15 percent is not negligible, it is significantly lower and more predictable than the earlier regime. For Indian exporters, especially in manufacturing and industrial goods, this provides immediate relief and restores competitiveness in the US market.

Crucially, key sectors such as pharmaceuticals, electronics and aerospace goods remain exempt, preserving India’s strengths in high-value exports.

How the new tariff regime works

The Trump administration has made it clear that the 15 percent tariff is only a temporary solution.

Section 122 tariffs automatically expire after 150 days unless Congress votes to extend them. To avoid losing leverage after this period, Trump has directed the US Trade Representative to initiate investigations under Section 301 into what the administration calls “unfair" trade practices.

These investigations can take up to a year and could eventually lead to higher and more targeted tariffs that are legally more durable. Until then, the 15 percent rate acts as a holding measure.

At the same time, sector-specific tariffs under Section 232 of the Trade Expansion Act will remain in place. This includes duties on steel and aluminium imposed on national security grounds.

India versus other major economies

India is not alone in benefiting from the reset. China, South Korea and Brazil will also see tariffs reduced from earlier reciprocal levels.

However, countries such as the United Kingdom, Australia and Saudi Arabia may now face higher tariffs than before, as their earlier negotiated arrangements are overridden by the global levy.

Experts have noted that this change weakens Trump’s negotiating leverage. Many trade deals were signed under the threat of IEEPA tariffs that the Supreme Court has now ruled illegal. With that threat gone, partners may be less inclined to offer fresh concessions.

For India, this works in its favour. New Delhi had already negotiated interim understandings with Washington, and the new tariff ceiling reduces downside risk while talks continue.

The unresolved refunds problem

One of the biggest unanswered questions concerns refunds.

The Supreme Court ruling invalidated tariffs that had already collected between $130 billion and $175 billion in revenue. However, the court offered no guidance on how that money should be returned.

Treasury Secretary Scott Bessent said the funds are now “in dispute" and warned that the process could be “dragged out for weeks, months, years".

Businesses must file individual lawsuits to recover their money. More than 1,000 companies have already initiated legal action. Trump has said he expects the refunds to remain tied up in litigation for the next five years.

Political stakes for Trump

Politically, the ruling is seen as a major check on Trump’s executive power.

With midterm elections approaching in November and Republicans defending slim majorities in Congress, the decision complicates Trump’s trade strategy. Polls show 62 percent of Americans disapprove of his tariff policy as consumer costs rise.

Some Republicans now view the ruling as a “gift in disguise", allowing them to distance themselves from unpopular trade measures that have contributed to stagnant growth.

The bigger picture for India

For India, the Supreme Court ruling and Trump’s pivot to a capped, temporary tariff regime bring stability after months of uncertainty.

While tariffs have not disappeared, the worst-case scenarios have. Predictability, lower effective rates and exemptions for critical sectors together improve India’s trade outlook.

In a volatile global environment, that alone is a significant win.