The US Supreme Court’s majority ruling against reciprocal tariffs has opened up a scenario of bewildering possibilities for India and the rest of the world. The court has struck down the exercise of powers under the International Economic Emergency Powers Act, 1977, as a case of executive overreach, holding that Congress should not have been bypassed. The world watches with bated breath on what the Trump administration might unleash next.
The US has already invoked Section 122 of the Trade Act, 1974 to impose global tariffs of 15 per cent to deal with a ‘large and serious’ trade deficit. This can run only for 150 days. A review, possibly with legislative sanction, might be needed for an extension. Treasury Secretary Scott Bessent has darkly hinted that Section 338 of the Tariff Act, 1930 might come into play. The section allows for tariffs up to 50 per cent on ‘discriminatory’ foreign imports, but it is vague in scope, and about implementing agencies. Meanwhile, the tools being used are Section 301 of the Trade Act, 1974, and Section 232 of the Trade Expansion Act, 1962. These two have to be preceded by time-consuming investigations establishing unfair trade practices and national security concerns, respectively.
So, it would be premature to assume that high tariffs are a thing of the past. What is more likely is that future options exercised by the Trump administration could be litigated. The Congress may not endorse these options readily, as it showed in Canada’s case. While the scenario is volatile, India and others seem to be better placed after the ruling to deal with a befuddled Trump administration. They are now faced with 15 per cent plus MFN tariffs on their exports. Country-specific reciprocal tariffs, 18 per cent in India’s case as per the framework agreement, have ceased to be, but sectoral tariffs on steel and aluminium globally — under Section 232 — remain. It is estimated that over half of India’ exports to the US will now attract 15 per cent plus MFN tariffs.
The big question now is: how should India deal with an incensed President Trump in its ongoing trade talks? Rescinding the admittedly one-sided interim framework deal is not an option, for three reasons: first, in principle, there are gains to be had from a well-tailored pact with the US; second, it is possible to leverage the confusion arising out of the court order to arrive at favourable terms; and third, a walkout can provoke a needlessly hostile response. A clause in the February 6 joint statement, in fact, says: “In the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments.” India can clear its positions on areas such as application of standards, particularly in agriculture, exercise of digital sovereignty, and the need to delink trade from geopolitical alignments — issues mentioned in the joint statement. In other words, a deal is on; the terms should change.
Published on February 22, 2026