After the tariff rebuke: How India should recalibrate its US strategy

The United States Supreme Court’s decision in Learning Resources v Trump has come as a respite for many countries. In substance, it is a constitutional reassertion of Congress’s primacy over trade taxation. One should read how Chief Justice John Roberts framed the issue: “We decide whether the International Emergency Economic Powers Act (IEEPA) authorises the President to impose tariffs.” The court’s answer is categorical: It does not.

The opinion proceeds from first principles. Article I, Section 8 vests in Congress the power to “lay and collect Taxes, Duties, Imposts and Excises”. Tariffs, the court notes, are “very clear[ly]… a branch of the taxing power”. The government conceded that the President has “no inherent authority to impose tariffs during peacetime”. The entire defence of the tariff regime therefore rested on IEEPA’s grant of authority to “regulate... importation”.

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The court rejects the proposition that the words “regulate” and “importation” can carry such weight. IEEPA, it emphasises, “contains no reference to tariffs or duties”. When Congress delegates tariff authority, it does so explicitly, using words such as “duty”, and it attaches limits on duration, scope, and process. By contrast, the administration’s reading would authorise the President to impose tariffs “of unlimited amount and duration, on any product from any country”, triggered by a presidential declaration of emergency. That, the court holds, is not a permissible inference from ambiguous text.

The judgement draws heavily on constitutional structure. The power to tax was “the most important” authority conferred on the Union, according to the Founding Fathers of the US. The Framers gave Congress “alone… access to the pockets of the people”. Against that backdrop, the court invokes its recent “major questions” jurisprudence. Where the Executive asserts “highly consequential power” over the national economy, it must “point to clear congressional authorisation”. IEEPA’s general language about regulating importation falls short.

History reinforces the point. “In IEEPA’s half century of existence,” the court notes, “no President has invoked the statute to impose any tariffs”. That absence of practice, coupled with the breadth of the authority now claimed, is treated as a “telling indication” that the asserted power extends beyond the statute’s legitimate reach.

The holding is formally narrow. The court does not define the full scope of IEEPA’s authority over import controls. It decides only that the power to regulate importation does not include the power to impose tariffs. Yet its institutional implications are broad. It removes from the Executive the most rapid and unbounded mechanism used over the past year to reshape American trade policy.

The President responded within hours on four fronts.

First, he invoked Section 122 of the Trade Act of 1974 to impose a 10 per cent global tariff for a period of 150 days. Section 122 allows temporary duties, capped at 15 per cent, to address “large and serious” balance-of-payments problems. This authority is time-limited and has rarely been used. It functions as a bridge, not a durable foundation.

Second, the administration reaffirmed the suspension of duty-free de minimis treatment for low-value shipments and subjected such goods to the new temporary duty. This step tightens enforcement and expands the effective tariff net across fragmented supply chains and e-commerce flows.

Third, the President directed the Office of the United States Trade Representative to initiate investigations under Section 301 of the Trade Act. Section 301 allows targeted action against “unreasonable or discriminatory” foreign trade practices, but only after formal investigation and findings. It is slower and more procedurally constrained than IEEPA, yet more legally secure.

Fourth, the administration publicly affirmed that the United States would “honour” its Agreements on Reciprocal Trade and expected partners to do the same, even as it acknowledged that “domestic legal authorities to impose future tariffs will change”. The message is continuity of strategic direction, but with different legal instruments.

The immediate economic effects will be shaped by timing and litigation. Lower courts must address the question of refunds for tariffs collected under IEEPA. Estimates run into the hundreds of billions of dollars. That uncertainty adds fiscal and market volatility. More structurally, however, the ruling changes the legal credibility of American trade threats and promises.

For India, which is in the process of finalising a trade arrangement with the United States, three implications are central.

First, the United States has lost the ability to impose sweeping, across-the-board tariffs at will under an emergency statute. Its remaining tools are either temporary, as in Section 122, or sectoral and investigative, as in Sections 232 and 301. This reduces the immediacy of coercive leverage but increases reliance on targeted, statute-based measures. Indian negotiators should recognise that Washington’s future actions are more likely to be granular and case-driven.

Second, any concession India makes in exchange for tariff stability must be anchored in legally durable commitments. A 150-day surcharge under Section 122 cannot credibly underpin multi-year trade concessions. If tariff relief is time-limited or contingent on ongoing investigations, India should insist on explicit rebalancing mechanisms. The court’s insistence on clear statutory authority introduces an element of authority risk into American trade policy. That risk should be contractually managed.

Third, the centre of gravity in US trade enforcement is likely to shift towards Section 301. That places greater scrutiny on issues such as digital trade rules, data localisation, intellectual property enforcement, standards regimes, and industrial policy measures. India’s negotiating strategy should therefore prioritise procedural safeguards. These might include mandatory consultations before the initiation of investigations, defined evidentiary standards, and time-bound review mechanisms. The objective is not to eliminate US trade remedies, which would be unrealistic, but to embed predictability in their deployment.

The Supreme Court has not ended American protectionism. It has required that it proceed through “regular order”. Tariffs remain a central instrument of US economic statecraft. What has changed is the legal path through which they must travel.

For India, this is neither cause for complacency nor alarm. It is a reminder that trade agreements with the United States must now be drafted with particular attention to statutory foundations, duration, and remedial design. The constitutional rebuke in Washington has reshaped the bargaining environment. New Delhi would be prudent to adjust its negotiating architecture accordingly.

(Aditya Sinha (X: @adityasinha004) writes on macroeconomics and geopolitics. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)