The February 20 verdict, delivered by a 6–3 majority, held that the Trump administration lacked the authority to impose sweeping “reciprocal tariffs” under the 1977 International Emergency Economic Powers Act (IEEPA). The decision, the report notes, has “abruptly reshaped the global trade landscape” by removing a key source of tariff pressure that had influenced ongoing negotiations.
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Trade deals lose some relevance
The ruling weakens the rationale behind several recent US trade arrangements that were negotiated largely to avoid higher tariffs. Countries including the UK, Japan, the European Union, Malaysia, Indonesia, Vietnam and India had engaged with Washington partly to mitigate such exposure.
“With a temporary 10% tariff now in place — and even that facing legal uncertainty — partner countries may question the value of those agreements,” the report said, adding that some may even consider them “useless and one sided.”
At the same time, a complete withdrawal remains unlikely. Countries may hesitate due to the risk of retaliation, the temporary nature of the tariff, and the possibility of future trade actions.
India’s tariff exposure eases, but risks remain
For India, the immediate impact appears mixed but somewhat favourable in the short term.The report notes that the removal of reciprocal tariffs will “free about 55% of India’s exports to the United States from the 25% duty,” allowing them to revert to standard Most Favoured Nation (MFN) rates.
At the same time, a significant share of exports — including smartphones, petroleum products and medicines — remains outside the tariff net altogether.
However, the relief is partial. Section 232 tariffs continue to apply, including 50% duties on steel and aluminium and 25% on certain auto components, limiting gains for some sectors.
A volatile tariff trajectory
The latest shift follows a year of rapid and often unpredictable changes in US tariff policy affecting Indian goods:
* Prior to April 2, 2025: Only MFN tariffs applied
* April–August 2025: Additional 10% reciprocal tariff introduced
* August 2025 (early): Reciprocal tariff raised to 25%
* August 2025–February 2026: Total duties reached 50%, including penalties linked to India’s purchase of Russian oil
* February 2026 (early): Penalty removed, reducing tariffs to 25%
* From February 24, 2026: A uniform 10% tariff replaces earlier structures for 150 days
A previously proposed reduction of reciprocal tariffs to 18%, announced in a February 6 joint statement, has not yet been implemented and may now be overtaken by events.
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India may revisit trade strategy
Against this backdrop, the GTRI report argues that the basis of India’s ongoing trade negotiations has weakened.
After offering concessions — including lowering MFN tariffs, easing regulations, and signalling increased imports from the US — India was expecting a preferential tariff outcome. “Now, even without a trade deal, India, like other countries, faces a 10% tariff on most goods, rendering the agreement being negotiated useless,” the report said.
Importantly, the February 6 joint statement provides flexibility. It states that “in the event of any changes to the agreed upon tariffs… the other country may modify its commitments.” The report suggests India should use this clause to “either opt out… or delay negotiations or seek fresh terms” to restore balance.
Court curbs executive power on tariffs
The ruling also marks a structural shift in how US trade policy may be conducted.
The court held that the IEEPA does not authorise broad tariff actions without congressional approval, effectively closing off the use of emergency powers as a shortcut for economy-wide tariffs. As the report puts it, the decision “reasserts Congress’s primacy in trade policy and closes off the use of emergency powers as a shortcut.”
For countries like India, this removes a fast-track route for sweeping tariffs, but replaces it with a more complex and slower-moving policy framework.
Temporary tariffs add fresh uncertainty
Within hours of the ruling, the US administration imposed a temporary 10% tariff on most imports under Section 122 of the Trade Act of 1974, effective February 24, 2026 for up to 150 days.
However, the report cautions that this provision “has never been used in the 50 years since it was enacted” and rests on “uncertain legal footing,” raising the likelihood of further challenges.
While broader emergency powers have been curtailed, the US can still impose tariffs through other mechanisms. These include Section 232 on national security grounds and Section 301 targeting unfair trade practices, though both are narrower and require detailed investigations.
As the report sums up: “Sweeping tariffs are harder to impose now. Legal options exist, but they are slower, more limited, and vulnerable to legal challenge.”
Legal and financial fallout in the US
The ruling could also trigger significant financial consequences within the United States.
Tariffs already collected — estimated at tens of billions of dollars — may need to be refunded, though the court has not laid out a clear mechanism. Multiple lawsuits have already been filed by importers, and the process could take years to resolve, with smaller firms potentially disadvantaged by legal costs.
A shift in leverage
The dispute dates back to April 2025, when Trump declared persistent US trade deficits a national emergency and imposed sweeping tariffs using IEEPA — a move widely criticised as an unprecedented expansion of executive authority.
The Supreme Court’s ruling now reinforces constitutional limits on that authority while signalling that future tariff actions will face tighter scrutiny.
Taken together, the judgment and the interim tariff response introduce both relief and uncertainty for trading partners. For India, the immediate takeaway is a shift in negotiating dynamics: the pressure to secure relief from steep, country-specific tariffs has eased, even as policy unpredictability remains.
As the report concludes, the developments “may prompt countries, including India, to reassess ongoing trade negotiations,” underscoring the need to recalibrate strategy in a rapidly changing trade environment.