US Tariff Twists: Where Does India Stand, or How Will Exporters Get Impacted

Following the landmark February 2026 Supreme Court strike-down of the US tariff, New Delhi has paused trade negotiations to protect India’s GDP from the resulting policy volatility. Indian exporters and investors should reassess US market strategies as tariff policies shift from country-specific concessions to a broader global framework, increasing pricing and compliance uncertainty. Businesses should incorporate tariff-risk planning and closely track evolving India-US trade negotiations.

On February 20, 2026, the United States Supreme Court ruled that several of the most important tariffs were unlawful, finding that the administration exceeded its authority by relying on emergency powers to impose duties on numerous trading partners. As a result, certain tariffs were struck down.

Tariffs are taxes imposed on imported goods, typically calculated as a percentage of the product’s value, and are paid by importing companies, which may pass the added costs on to consumers or businesses through higher prices.

Despite the Court ruling, President Donald J. Trump’s latest tariff threats has cautioned Asian countries, including India, on the global trade rejig.

Soon after the US Supreme Court struck down the tariffs imposed under the Trump administration, the US President announced a new plan to impose a 10 percent levy on all goods entering the United States under a separate legal provision. Within hours, this was increased to 15 percent.

The 15 percent tariffs, announced on Saturday (February 21), represent the maximum rate permitted under this rarely used trade mechanism – Section 122 of the 1974 Trade Act. The measure is also temporary, as the provision allows such tariffs to remain in place for only around five months, after which the administration must seek approval from Congress. For now, however, the flat 15 percent rate leaves most major trading partners, including India, in a relatively better position than they were before Friday’s court ruling.

In April 2025, Trump had introduced broad tariffs on imports from most countries, arguing that such measures would strengthen domestic manufacturing, generate employment, and reduce the US trade deficit.

What does the US Supreme Court verdict say on Trump tariff?

In the Learning Resources, Inc. vs. Trump court case, the Supreme Court delivered a major verdict on the limits of presidential trade authority, striking down a series of broad import tariffs imposed by the present US administration through executive orders. In a 6-3 justice ruling, the Court held that the tariffs exceeded the powers delegated to the President by Congress under a 1977 emergency statute.

Background: Use of emergency powers to impose tariffs

The dispute centered on the International Emergency Economic Powers Act (IEEPA), which allows the President to regulate economic transactions during a declared national emergency involving foreign threats to US national security, foreign policy, or the economy.

Relying on this law, the administration introduced multiple tariffs, including:

• “Trafficking tariffs” targeting imports from China, Canada, and Mexico, justified as a response to concerns over fentanyl trafficking.
• “Reciprocal tariffs” imposing a baseline 10 percent duty on imports from most countries, with higher rates applied to certain trading partners. These measures were justified on the basis that large US trade deficits constituted an economic and national security threat.

Businesses and several US states challenged the tariffs in court, arguing that IEEPA did not authorize the imposition of customs duties.

US Supreme Court’s ruling on February 20, 2026

The Supreme Court agreed with the challengers, concluding that IEEPA permits regulation of commerce during emergencies but does not explicitly authorize tariffs. Writing for the majority, Chief Justice John Roberts stated that the statute’s language could not reasonably be interpreted as granting the President unlimited authority to impose tariffs of any scale or duration.

There are nine members on the US Supreme Court bench.

1. Those who ruled against the Trump tariffs: Chief Justice John Roberts and Justices Neil Gorsuch, Amy Coney Barrett, Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson
2. Those who were against the verdict: Justices Brett Kavanaugh, Clarence Thomas, and Samuel Alito.

The Court emphasized that no previous president had interpreted IEEPA as conferring tariff-imposing powers and found that such a broad reading would improperly expand executive authority.

Application of the “major questions” doctrine

Part of the judgment relied on the constitutional “major questions” doctrine, under which courts require clear congressional authorization before the executive branch can exercise powers with vast economic or political consequences. The Court held that imposing sweeping global tariffs represents a decision of major economic significance that Congress must expressly authorize.

Outstanding issues and economic implications

The Court did not decide whether importers who paid the tariffs, estimated at more than US$200 billion in 2025, must receive refunds. In his dissent, Justice Brett Kavanaugh warned that the ruling could require the federal government to reimburse billions of dollars and may create uncertainty for trade agreements negotiated while the tariffs were in effect.

India evaluates trade strategy amid shifting US tariff policy

Recent developments in US trade policy under Trump have introduced fresh uncertainty into global commerce, with India emerging as a key stakeholder closely reassessing its negotiating position. Following the US Supreme Court decision striking down the administration’s earlier reciprocal tariffs, the US government quickly introduced a revised tariff framework, initially a 10 percent universal tariff, and within a day, raising it to 15 percent using a different and relatively untested legal mechanism under Section 122 of US trade law.

Implications for India-US trade negotiations

For India, the ruling has directly affected ongoing trade discussions with Washington. Amid uncertainty over the future tariff regime, the Indian government has postponed a planned visit by its negotiating delegation to the US. Earlier in February 2026, India and the US announced the conclusion of an interim trade agreement, which was intended to finalize the legal language later in the month.

Both sides considered it prudent to delay high-level engagement until the legal and economic implications of the court ruling and subsequent tariff actions become clearer. The delegation, led by chief negotiator Darpan Jain, had been scheduled to hold discussions ahead of a proposed visit by US Trade Representative Jamieson Greer to India for the formal signing of the agreement.

Within policy circles in New Delhi, there is also a view that the Court’s decision could create greater negotiating flexibility, potentially allowing India to seek improved market access terms or tariff concessions.

Tariff adjustment and India’s export outlook

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India has faced relatively higher tariff exposure under the earlier US tariff frameworks. The move toward a flat 15 percent global tariff effectively reduces tariff levels for some countries, including India, by double-digit percentage points compared to earlier proposed rates, although overall duties remain elevated.

While this moderation may ease immediate pressure on Indian exporters, uncertainty persists regarding long-term tariff stability and the durability of negotiated trade arrangements.

Implications for India: Which US tariff actions have ended and which remain in force?

The recent White House Executive Order clarifies that the US has partially rolled back certain emergency tariff measures but has not dismantled the broader tariff framework affecting trading partners such as India. For Indian exporters and policymakers, understanding precisely what has changed and what has not is essential.

Tariff measures that have ended

The Trump administration has terminated additional ad valorem import duties imposed under emergency powers exercised through the IEEPA. The tariff components removed include those imposed under executive orders addressing:

1. Border- and drug-related security concerns
2. The synthetic opioid supply chain (including measures indirectly affecting Asian supply chains)
3. Tariffs connected to Venezuelan oil trade
4. Broad “reciprocal” tariffs aimed at reducing US trade deficits
5. Country-specific emergency actions involving Brazil, Russia, Cuba, and Iran

For India, the most relevant change is the termination of IEEPA-based reciprocal tariff surcharges, which had contributed to elevated duties on imports from multiple trading partners. US agencies have been directed to stop collecting these additional emergency tariffs and amend the US tariff schedule accordingly.

Tariff and trade measures still affecting Indian exports

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Despite the rollback, the February 20 executive order makes clear that most US trade restrictions remain unchanged, meaning Indian exporters should not interpret the decision as a full tariff withdrawal.

The following continue to apply:

1. The national emergency declarations underlying earlier trade actions remain active.
2. Tariffs imposed under Section 232 (national security measures) remain in force.
3. Tariffs imposed under Section 301 trade enforcement provisions continue unaffected.
4. The suspension of duty-free de minimis treatment remains operational.
5. A separate temporary import surcharge announced alongside the order continues to apply.

In practical terms, while one legal basis for tariffs has been removed, the overall US tariff environment remains restrictive.

Trump’s response to the SC ruling on tariffs

Following the decision of the US Supreme Court invalidating his emergency tariff measures, Trump has taken an assertive stance, signaling his intention to continue pursuing an aggressive trade policy through alternative legal mechanisms rather than scaling back tariff actions. For India-focused businesses and investors, the developments indicate a shift from legally contested emergency tariffs toward alternative statutory mechanisms that preserve tariff leverage while remaining within congressional authorization.

Recalibration of country-specific US tariff arrangements

The White House clarified that previously negotiated tariff concessions with partner economies, including India, the United Kingdom, and the European Union, would no longer guarantee preferential rates. Instead, these regions are now subject to the global 15 percent tariff framework unless new arrangements are negotiated.

Earlier negotiated tariff structures had placed Indian exports under an 18 percent tariff band, reflecting US concerns over market access and trade asymmetry. With the new proclamation, Indian exporters face uncertainty as negotiated concessions may effectively be overridden by temporary global tariffs.

Notably, the tariff order does not identify specific countries, reinforcing a universal baseline approach.

Certain goods categories, including pharmaceuticals, select electronics, fertilizers, and critical minerals, remain exempt, though exemption definitions are broadly drafted and operational clarity remains limited.

Canada and Mexico retain exemptions for goods compliant with the USMCA framework, underlining the regional trade integration.

Escalatory signaling and negotiation leverage

Trump has publicly warned that countries seeking to renegotiate trade terms following the Court’s decision could face higher tariffs, indicating that tariffs will continue to function as negotiation instruments rather than purely revenue measures. Meanwhile, US lawmakers are signaling resistance to extending tariffs beyond the statutory 150-day window without legislative approval, introducing an additional layer of policy uncertainty.

Evolving US tariff regime and implications for businesses in India

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The US has withdrawn IEEPA emergency tariffs, but India still faces the broader US tariff regime, meaning exporters should expect continuity rather than a major easing of trade barriers in the near term.

For Indian exporters and multinational investors, the evolving US tariff regime presents several structural considerations:

1. Increased policy volatility: The rapid transition from emergency tariffs to Section 122 measures demonstrates that US trade restrictions may persist regardless of judicial outcomes. Businesses should treat tariff exposure as a recurring rather than temporary risk.

2. Margin compression in key export sectors: Indian industries with strong US exposure, engineering goods, auto components, textiles, specialty chemicals, and electronics, may experience pricing pressure as tariff costs reduce competitiveness relative to near-shoring destinations.

3. Supply chain reconfiguration incentives: Companies may increasingly explore:

1. Partial manufacturing relocation,
2. US-based assembly operations, or
3. Partnerships within North American supply chains to mitigate tariff exposure.

4. Negotiation-driven trade environment: The administration’s approach signals a shift toward bilateral bargaining rather than rules-based multilateral trade stability. Indian firms should anticipate tariff policy becoming closely tied to geopolitical and market-access negotiations.

Investor outlook: From trade policy to industrial strategy

For investors, the key takeaway is that US tariffs are evolving into a structural industrial policy tool rather than a temporary trade remedy. The continuation of tariffs under alternative legal authorities suggests:

• Persistent protectionist risk in US market entry strategies
• Higher compliance and scenario-planning requirements
• Greater importance of geopolitical risk assessment in cross-border investment decisions

Indian companies with diversified export markets, localized US operations, or exposure to exempt sectors may demonstrate stronger resilience under the emerging trade framework.

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