A crucial case before the US Supreme Court could reshape America’s global trade relationships and deliver massive relief to trading partners like India. The top court has begun oral hearings to decide whether former President Donald Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) by imposing sweeping “reciprocal tariffs” on several countries.
If the court rules against Trump’s use of these powers, it could invalidate billions of dollars in tariffs potentially leading to refunds of around $100 billion to US importers, including an estimated $487 million linked to India.
India Hit Hard by 50% US Tariffs
India has been among the worst affected by Trump’s tariff strategy. The United States remains India’s largest export destination, yet Indian shipments fell 12% in September, mainly due to the heavy 50% import duties imposed under Trump’s IEEPA-based scheme.
Prime Minister Narendra Modi recently met with exporters to discuss measures to boost export competitiveness amid these trade challenges. The ongoing tariff war has strained several sectors, from agricultural exports to manufacturing, with exporters demanding urgent policy intervention.
What’s at Stake: $100 Billion in Refunds and a Trade Reset
According to PwC, the US government collected over $108 billion in tariffs by the end of October, $34 billion from China and $487 million from India. If the Supreme Court overturns Trump’s IEEPA tariff regime, the entire structure could collapse, forcing US Customs and Border Protection (CBP) to halt collections and issue refunds.
“Invalidation of the IEEPA tariffs may open the door for reimbursement of duties paid, which could be a complex but significant financial relief for global importers,” PwC noted in a recent report.
For India, such a ruling could mean not only monetary relief but also a chance to renegotiate a fairer and more balanced trade deal with Washington.
Legal Battle So Far: Trump Faces Multiple Defeats
Trump’s tariff authority has already been questioned in multiple courts.
- The US District Court for the Northern District of Illinois rejected the government’s argument in April.
- The US Court of International Trade (CIT) ruled in June that IEEPA does not authorize general tariffs.
- The Federal Circuit Court of Appeals in August held that Congress never delegated such broad tariff powers to the President.
If the Supreme Court upholds these rulings, it would effectively dismantle Trump’s “Liberation Day” tariff framework and invalidate many ad hoc trade deals signed under its influence.
Impact on Global Trade Deals
According to the Global Trade Research Initiative (GTRI), striking down Trump’s emergency tariff powers could “reverberate far beyond US borders.”
“The ruling would unravel the foundation of several recently negotiated trade arrangements with key partners like the EU, Japan, South Korea, and the UK all of which were struck under the shadow of those tariffs,” GTRI said.
For India, it could create an opening to negotiate a more equitable trade partnership, free from the pressure of steep reciprocal duties.
Trump’s Plan B: Section 232 Tariffs
With IEEPA powers under legal fire, the Trump administration has increasingly relied on Section 232 tariffs, citing “national security” concerns. These tariffs have targeted a wide range of products, from aluminium, steel, cars, and timber to industrial machinery and robotics.
While Section 232 tariffs are less sweeping, they offer stronger legal protection, as US courts have repeatedly declined to challenge national security-based trade restrictions.
However, Indian negotiators note that these tariffs apply uniformly to all countries and therefore do not distort competitiveness in the same way as Trump’s reciprocal tariffs.
A Potential Turning Point for India US Trade
If the Supreme Court curbs Trump’s tariff powers, it could mark the beginning of a new phase in US–India trade relations. Experts believe it would allow India to push for a more transparent and balanced deal, focusing on fair market access rather than one-sided tariff pressures.
For now, all eyes are on Washington. The court’s verdict will not only determine the fate of Trump’s tariff legacy but could also restore stability and predictability to global trade and deliver a long-awaited $500 million refund lifeline to Indian exporters.