SCOTUS Strikes Down Reciprocal Tariffs: Legal Fallout for India-US Trade

The United States Supreme Court’s 6-3 decision to strike down President Donald Trump’s reciprocal tariffs marks a watershed moment for executive authority in international trade. By ruling that the administration exceeded its mandate under the International Emergency Economic Powers Act (IEEPA), the Court has effectively dismantled the legal architecture used to justify the aggressive trade measures announced on April 2, 2025. This ruling does not merely affect a specific tax on goods; it challenges the foundational premise that the President can unilaterally impose reciprocal duties without explicit Congressional approval or a bona fide national emergency that fits the narrow definitions of the IEEPA.

Despite the judicial setback, the administration’s immediate response has been one of defiance, with President Trump asserting that nothing changes regarding the trade relationship with India. This stance creates a complex legal vacuum for multinational corporations and trade compliance officers. While the Supreme Court has declared the current tariff structure unlawful, the executive branch’s intent to seek alternative routes suggests that the period of trade volatility is far from over. For Legal and RegTech professionals, this necessitates a dual-track strategy: preparing for potential refund claims on duties paid under the now-invalidated rules, while simultaneously bracing for new, perhaps more targeted, executive actions under different statutes such as Section 232 of the Trade Expansion Act or Section 301 of the Trade Act of 1974.

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The United States Supreme Court’s 6-3 decision to strike down President Donald Trump’s reciprocal tariffs marks a watershed moment for executive authority in international trade.

The specific focus on India highlights the transactional nature of current U.S. trade policy. The President’s rhetoric—alternating between praising Prime Minister Narendra Modi as a great gentleman and accusing the nation of ripping off the United States—underscores the geopolitical stakes. The administration has linked trade concessions to broader security issues, including India’s energy ties with Russia and its regional stability with Pakistan. Trump’s claim of averting a conflict through the threat of 200 percent tariffs, though disputed by New Delhi, illustrates how trade policy is being used as a primary tool of hard-power diplomacy.

From a regulatory perspective, the ruling reinforces the Major Questions Doctrine, which suggests that if an agency or the President seeks to exercise powers of vast economic and political significance, it must point to clear congressional authorization. The IEEPA, originally designed to freeze assets of hostile foreign powers or respond to sudden crises, was deemed an inappropriate vehicle for a permanent reciprocal trade regime. This creates a precedent that will likely embolden other trade partners to challenge U.S. tariffs in domestic courts, potentially leading to a cascade of litigation against other America First trade initiatives.

Looking ahead, the market should anticipate a period of intense legislative maneuvering. If the administration cannot find a viable alternative route through existing executive powers, it may pressure Congress to codify reciprocal tariff authority into law. Until then, the status of goods currently in transit remains a point of significant friction. Importers must navigate a landscape where the highest court has invalidated the costs they are being asked to pay, yet the executive branch remains committed to collection. This tension between judicial finality and executive persistence will likely be the defining feature of U.S. trade law in the coming fiscal year.