Supreme Court Strikes Down Trump Tariffs; Section 122 Emerges as Alternative

The US Supreme Court has struck down Donald Trump’s sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA), ruling that the law does not authorise the President to levy import duties.

Within hours of the decision, Trump signalled he would invoke Section 122 of the Trade Act of 1974 to sustain his tariff strategy under a different legal framework.

The move reshapes the structure of US trade policy and carries implications for US tariffs on India.

What Is Section 122 of the Trade Act of 1974?

Section 122 tariffs allow the US President to impose temporary import surcharges of up to 15% for a maximum of 150 days.

The provision may be used in cases of large balance-of-payments deficits, where imports significantly exceed exports. Unlike IEEPA, Section 122 does not require a formal investigation before action. However, any tariff imposed under this section automatically expires after 150 days unless Congress votes to extend it.

IEEPA Tariff Ruling: Why the Supreme Court Intervened

IEEPA was enacted to address national emergencies involving extraordinary foreign threats. Historically, it has been used for sanctions and asset freezes.

The Supreme Court ruled that the statute does not provide authority to impose tariffs. The judgment restricts the use of emergency economic powers for trade duties but does not eliminate other statutory options available to the administration.

What Legal Tools Remain for Trump Tariffs?

Following the ruling, Trump announced plans to impose a 10% tariff on imports from all nations under alternative legal provisions.

He also indicated that other statutes remain available, including:

• Section 301 – Used to target unfair trade practices
• Section 232 – National security-based tariffs
• Section 338 – Tariffs against discriminatory trade practices

The ruling restricts one route but does not eliminate the broader tariff arsenal.

US Tariffs on India After the Supreme Court Decision

For India, the decision introduces both opportunity and uncertainty.

Indian exports to the US currently face a 25% tariff. Under the interim trade framework, the rate was expected to decline to 18%.

The IEEPA tariff ruling briefly raised expectations of a reset to lower Most Favoured Nation rates. However, Trump’s announcement of a 10% global tariff suggests that duties may continue under new statutory provisions.

This keeps India-US tariff news fluid, especially as a bilateral agreement is expected in the coming weeks.

Read About India–US Trade Deal News

Tariffs’ Impact on India’s Negotiation Position

The ruling may allow India to renegotiate sensitive areas such as:

• Agriculture access
• Cross-border data flows
• Oil purchase sovereignty
  

Trade experts suggest the decision strengthens India’s position before finalising any binding agreement.

Conclusion

The Supreme Court has drawn legal guardrails around emergency tariff powers. However, Trump tariffs are likely to continue under Section 122 or other trade laws.

For India, the development creates both uncertainty and opportunity. While tariff pressure remains, the legal reset may open space for recalibration in ongoing trade talks.

Source: https://www.moneycontrol.com

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