US Supreme Court strikes down “Trump Tariff” trade powers

The US Supreme Court on Friday ruled that President Donald Trump exceeded his authority by imposing sweeping “reciprocal” tariffs under emergency powers, a decision that narrows executive trade authority and reduces tariff uncertainty for Indian exporters — particularly in electronics, telecom and digital infrastructure supply chains.

In a 6–3 verdict, the Court held that the International Emergency Economic Powers Act (IEEPA) does not authorise the President to unilaterally impose tariffs.

Chief Justice John Roberts wrote that the administration “points to no statute” in which Congress clearly permitted such authority, concluding that the law does not allow duties of “unlimited amount, duration and scope”.

The majority also noted that in nearly five decades of IEEPA’s existence, no President had invoked the statute to impose tariffs — a factor it cited as evidence that such authority was never intended.

The judgment effectively dismantles the reciprocal tariff framework that had exposed Indian exports to elevated duties. Broad-based tariffs imposed under emergency powers can no longer be introduced without Congressional approval.

The ruling comes weeks after the 2 February 2026 revised trade agreement between the United States and India to reduce the Trump tariff on Indian goods to 18%, down from 50%, including the removal of a 25% penalty previously linked to India’s oil imports from Russia.

With the Court now clarifying that IEEPA cannot be used to impose sweeping reciprocal tariffs, the legal basis for such broad duties has narrowed significantly. Any attempt to revive similar measures would require legislative backing.

Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat, said the decision brings “significant legal clarity and reduces tariff uncertainty for India, reinforcing limits on unilateral tariff actions.”

“Notably, under the interim trade arrangement the US had agreed to reduce reciprocal tariffs on India to 18% which shall no longer remain relevant following the Court’s decision. Any attempt to levy such tariffs would require Congressional approval,” Mishra said.

He added that the judgment is “likely to give much-needed relief and a competitive boost to Indian exporters, while also paving the way for potential refunds of tariffs collected without adequate legal basis.”

The Court also rejected arguments that emergency statutes should be interpreted broadly simply because they address national crises, reinforcing constitutional limits on executive trade powers.

Implications for Digital and Electronics Sectors

For India’s digital manufacturing ecosystem—including mobile phones, telecom equipment, networking gear, semiconductor-linked components and data centre hardware—the immediate implication is reduced exposure to sudden, economy-wide tariff actions.

India’s electronics exports to the US have expanded under production-linked incentive (PLI) schemes and deeper integration into global value chains. Executive-imposed reciprocal tariffs had raised concerns over supply chain volatility and pricing risks.

The United States remains India’s largest export destination for electronics and technology-linked goods, making tariff stability particularly material for long-term supply contracts and capital-intensive manufacturing investments.

“Telecom, including mobile phones and hardware are deemed vital to national security under Section 232 and hence the Supreme Court’s ruling on reciprocal tariffs is unlikely to materially alter tariff exposure for these strategic technology products,” the expert said.

Tariff Authority Shifts Back to the Congress

The Court’s decision restores tariff-setting authority to statutory mechanisms requiring investigations, defined triggers and Congressional oversight.

The judgment also clarified that tariff disputes fall within the jurisdiction of the US Court of International Trade, defining the legal pathway for future challenges.

While the US administration retains tools under Section 232 and Section 301 to impose sector-specific measures, the scope for invoking emergency powers to introduce sweeping duties has narrowed.

The ruling concerns import tariffs and does not alter existing US export control regimes, semiconductor licensing rules, or technology transfer restrictions.

For India-US trade, the ruling reduces immediate volatility risk in its largest export market, even as trade engagement continues under structured legal channels.

For the digital technology and infrastructure ecosystem—spanning electronics manufacturing, telecom exports, semiconductor value chains and IT hardware—the verdict signals greater predictability in tariff policy, though sector-specific trade measures remain part of the US toolkit.

The image accompanying this story was created using AI-based tools.