In a landmark ruling that has sent reverberations across the global trading order, the United States Supreme Court (SCOTUS) struck down President Donald Trump’s sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA) by a margin of 6-3. The ruling, which saw Chief Justice John Roberts and two conservative justices appointed by Trump himself siding with the three liberal justices, is one of the most consequential checks on executive authority in recent American legal history. The judgment directly impacts India, which was among the most heavily tariffed countries, facing a 50% duty on its exports to the United States on account of its continued trade with Russia, membership of BRICS, and imports of Russian oil.
For UPSC and SSC aspirants, this development is extraordinarily significant. It touches upon constitutional law, separation of powers, international trade, India’s foreign policy balancing act, global economic governance, and the structure of multilateral institutions like the World Trade Organization (WTO). The ruling also intersects with India’s ongoing free trade agreement (FTA) negotiations with the United States, which were proceeding under a cloud of uncertainty created by Trump’s aggressive tariff posturing.
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Table of Contents
Five Important Key Points
- The US Supreme Court ruled 6-3 that Trump’s use of the IEEPA to impose unlimited tariffs lacked clear Congressional authorization, marking a rare judicial rebuke of executive overreach on trade policy.
- India was among the most heavily impacted nations, facing 50% tariffs that threatened Indian exports of steel, pharmaceuticals, textiles, and IT products.
- The ruling does not affect tariffs imposed under other laws like Section 232 of the Trade Expansion Act of 1962, meaning tariffs on steel and aluminium remain.
- Trump immediately announced he would impose a 15% global tariff rate under Section 122 of the Trade Act of 1974, which allows 150 days of emergency tariffs without Congressional approval.
- Brazilian President Lula, visiting India at the time, called for developing nations to form “negotiating blocs” and not negotiate individually with the US — a stance that has significant implications for multilateral trade diplomacy.
Background: What Is IEEPA and How Was It Being Used?
The International Emergency Economic Powers Act of 1977 is a US federal law that grants the President broad authority to regulate international commerce during a national emergency. In its traditional application, it was used to impose sanctions on hostile states, freeze assets of terrorist organizations, and restrict trade with adversaries. What was unprecedented in the Trump administration’s use was the invocation of IEEPA to impose tariffs of unlimited scope, duration, and amount on virtually all trading partners of the United States — including close allies like Canada, the European Union, Japan, and strategic partners like India and Brazil.
The administration argued that the trade deficit itself constituted a national emergency and that IEEPA’s language authorizing the President to “regulate” foreign commerce included the power to impose tariffs. Critics countered that taxing authority under the US Constitution is vested in Congress, and that tariffs are a form of taxation that cannot be delegated to the executive through a vaguely worded statute without explicit legislative direction.
The Supreme Court agreed with critics. The majority opinion stated that IEEPA contained no reference to tariffs or duties, that no previous President had read the statute to confer such power, and that “extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope” requires unambiguous Congressional authorization under the doctrine of the “major questions doctrine” — a constitutional principle that demands clear legislative text before courts allow executive agencies or the President to act on matters of vast economic and political significance.
Constitutional Principles at Stake: Separation of Powers and the Major Questions Doctrine
The ruling is a textbook application of the major questions doctrine, which the US Supreme Court has increasingly deployed since the early 2000s to rein in executive overreach. The doctrine holds that when an agency or the executive claims authority to regulate a matter of deep economic or political significance, courts will demand clear statutory authorization rather than inferences from general or broad language.
For students of constitutional law in India, this has a powerful parallel. Article 265 of the Indian Constitution states that no tax shall be levied or collected except by authority of law. Similarly, the principle of delegated legislation in India requires that when Parliament delegates power to the executive, it must provide an intelligible differentia and adequate guiding principles — it cannot hand over the entire legislative function. The Indian Supreme Court has repeatedly affirmed that excessive delegation without policy guidance is unconstitutional.
The US ruling is also significant for its demonstration that even in a presidential system with strong executive authority, the judiciary remains a co-equal branch capable of imposing meaningful constitutional limits. In India’s parliamentary democracy, such discipline is enforced through a combination of judicial review, Parliamentary accountability, and constitutional conventions.
Impact on India-US Trade Relations
India’s relationship with the United States on trade has been complex and layered. The two countries are among each other’s largest trading partners. Bilateral trade stood at approximately $130 billion in recent years, with India running a trade surplus largely driven by IT services, pharmaceuticals, textiles, gems and jewellery, and engineering goods. The Trump administration’s 50% tariff threat was directed at this surplus and was compounded by India’s refusal to fully align with US sanctions against Russia.
The Supreme Court ruling creates a degree of breathing space for Indian negotiators. However, the relief is partial. Since Trump has announced his intention to impose a 15% global tariff under Section 122 of the Trade Act of 1974 — a law that allows a temporary tariff of up to 15% for 150 days without fresh Congressional approval — India still faces meaningful trade barriers. More importantly, tariffs on steel and aluminium under Section 232 remain unaffected by the SCOTUS ruling and continue to disadvantage Indian exports in these sectors.
The FTA negotiations between India and the US, which had been gaining momentum, are now in a state of recalibration. Indian negotiators had been considering concessions in agriculture, dairy, and medical devices to secure reductions in tariffs on Indian goods. With the IEEPA tariffs struck down, the calculus has changed — the American side’s leverage is diminished, which paradoxically may give India more negotiating room but also reduce the urgency of reaching a deal.
The “Negotiating Blocs” Idea: Lula’s Proposal and Multilateral Diplomacy
Brazil’s President Lula, during his four-day state visit to India, made a politically charged proposal that countries facing US tariffs should form “negotiating blocs” rather than bargain individually. Drawing on his background as a trade union leader — he famously led Brazil’s steelworkers in the 1980s before founding the Workers Party — Lula analogized the situation of smaller and medium economies to that of individual workers facing a powerful corporation. His argument was that individual negotiation always produces outcomes unfavorable to the weaker party.
This proposal has significant implications for global economic governance. It invokes the spirit of South-South cooperation, the BRICS grouping’s economic solidarity dimension, and the broader critique of the Washington Consensus. However, forming effective negotiating blocs among nations with diverse economic structures, geopolitical alignments, and trade profiles is far easier to propose than to implement. India, for instance, has historically been reluctant to lock itself into economic alliances that constrain its strategic autonomy. External Affairs Minister Jaishankar’s articulation of “issue-based alignments” reflects this preference.
Still, the idea is not without merit. In the context of the WTO’s dispute resolution mechanism, developing countries have used collective action effectively — the G77, the G20 coalition of developing nations within the WTO, and the African Union’s unified trade positions have all demonstrated that bloc-based negotiation can produce better outcomes. The challenge is translating solidarity into actionable policy.
Implications for Global Trade Architecture and the WTO
The SCOTUS ruling, while primarily a US constitutional event, has broader implications for the rules-based international trading order anchored in the WTO. The WTO’s fundamental principles — Most Favoured Nation treatment, national treatment, and bound tariff schedules — had been under systematic assault during the Trump tariff era. Countries affected by the IEEPA tariffs had filed dispute settlement complaints, but the WTO’s Appellate Body had been rendered non-functional because the Trump administration had blocked the appointment of new judges, a practice that continued under Biden and now under Trump’s second term.
The SCOTUS ruling, by curtailing the President’s unilateral tariff powers, effectively forces future US trade policy back through Congressional channels. This is a partial restoration of the multilateral trade order because any Congressional legislation on tariffs would need to comply with WTO agreements to which the US remains a party (though withdrawal from the WTO has been periodically threatened). It also signals to other nations that they cannot assume unilateral executive tariff actions will stand indefinitely in the United States.
Governance Concerns and the Way Forward
For India, the way forward requires a multi-pronged strategy. First, India must continue building domestic manufacturing capacity across sectors vulnerable to tariff shocks — electronics, semiconductors, specialty chemicals, and advanced manufacturing. The Production-Linked Incentive (PLI) scheme and the National Industrial Corridor Development Programme are steps in this direction but require faster implementation. Second, India should pursue diversification of export markets through active engagement with the ASEAN free trade zone, the UK FTA (currently under negotiation), the Gulf Cooperation Council, and the African Continental Free Trade Area. Third, India must maintain its principled position at the WTO while working pragmatically to restore the Appellate Body’s functionality through coalitions with like-minded countries.
Relevance for UPSC and SSC Examinations
For UPSC Prelims, this topic is relevant for questions on international organizations (WTO), US constitutional structure (separation of powers, major questions doctrine), India-US bilateral trade, BRICS, and Section 232 and Section 301 of US trade law. For UPSC Mains, it connects directly to GS Paper II topics on international relations and bilateral trade, and GS Paper III topics on international trade, economic policy, and India’s external sector. The ethical dimension of sovereign nations using unilateral economic coercion is relevant to GS Paper IV. For SSC CGL and CHSL examinations, basic awareness of what IEEPA is, the nature of the SCOTUS ruling, and India’s trade exposure to the US is sufficient. Essay paper candidates should be able to connect this ruling to broader themes of multilateralism versus unilateralism, economic sovereignty, and the future of the rules-based international order.