US court strikes down Trump Tariffs: 5 reasons why it is good news for India

File photo of Prime Minister Narendra Modi and US President Donald Trump holding a joint press conference in the East Room of the White House in Washington, DC, on February 13, 2025.

When US President Donald Trump announced his ‘Liberation Day’ tariffs on April 2, it sent shockwaves across global markets. Framed as a bold strike against unfair trade, the tariffs were widely seen as an aggressive, unilateral move that threatened to upend decades of bilateral economic cooperation. But in a dramatic turn, a US federal court has now struck down Trump's tariff orders, ruling that he exceeded his presidential authority.

The verdict marks a significant setback to Trump as he bids to redraw the US trading relationship with the world by forcing governments to the negotiating table through tough new tariffs.

Attorneys for the Trump administration promptly filed an appeal against the ruling, which gave the White House 10 days to complete the bureaucratic process of halting the tariffs.

"It is not for unelected judges to decide how to properly address a national emergency," White House spokesman Kush Desai said in a statement.

"President Trump pledged to put America first, and the administration is committed to using every lever of executive power to address this crisis and restore American greatness," Desai said.

Analysts at London-based research group Capital Economics said the case may end up in the hands of the Supreme Court.

"But it would be unlikely to mark the end of the tariff war given the various other routes through which the Trump administration could impose tariffs," they said, noting that the US president could explore other sections of US law or seek congressional approval for tariffs.

Good news for India?

Notably, the verdict comes just a week before the next round of talks with the US on reaching an interim trade agreement, which will be held on June 5 and 6 in New Delhi, according to a senior official from the Ministry of Commerce.

With a team of US officials expecting to visit India next month for trade talks, there is a possibility that the two countries may agree on an interim trade pact by June 25, news agency PTI reported on May 28, quoting sources.

Both sides are looking at an interim trade deal before the first tranche of the proposed bilateral trade agreement (BTA) as the USA's 26 per cent reciprocal tariff on India is suspended till July 9 this year. It was imposed by the US on April 2. However, Indian goods still attract the 10 per cent baseline tariff imposed by America.

Till now, New Delhi was pushing for full exemption from the 26 per cent reciprocal tariff on domestic goods. But the US Court of Trade now blocking Trump’s tariffs presents several potential benefits for India across trade, diplomacy, and economic sectors.

• The court's decision undermines the legal foundation of the reciprocal tariffs that had been a significant pressure point in US-India trade discussions. With the 26% tariff threat now invalidated, India gains greater flexibility to negotiate trade terms without the looming risk of punitive duties. This shift allows India to pursue its trade interests more assertively, focusing on equitable agreements rather than defensive concessions.

• With India having signed a free trade agreement with the UK earlier this month, New Delhi is now better positioned to pursue a more favorable trade deal with the United States, leveraging its growing credibility as a reliable economic partner.

• The removal of the tariff threat is particularly beneficial for Indian exporters in sectors like pharmaceuticals, textiles, and information technology, which are heavily reliant on the US market. The court's ruling alleviates concerns over potential cost increases due to tariffs, thereby enhancing the competitiveness of Indian goods and services in the US.

• The Global Trade Research Initiative (GTRI) has advised India to reassess its approach to trade agreements with the US in light of the court ruling. The invalidation of the tariffs suggests that India should proceed cautiously, ensuring that any future agreements are based on mutual respect and legal soundness, rather than under duress from unilateral tariff threats.

• The court's ruling sets a significant legal precedent that limits the executive branch's authority to impose tariffs without congressional approval. This development provides India with a more predictable and stable framework for trade relations, reducing the risk of sudden, unilateral tariff impositions in the future.