A recent U.S. court ruling that struck at the heart of Donald Trump’s sweeping tariff regime has sparked fresh hope among global exporters. The judgment, however, has also cast a spotlight on India’s lack of urgency in countering the trade shock.
Court Ruling: A Setback for Trump
On August 29, the U.S. Court of Appeals for the Federal Circuit, in a 7–4 verdict, ruled that President Trump had overstepped his authority under the International Emergency Economic Powers Act (IEEPA). The court said Trump’s justification of trade deficits and fentanyl inflows as “national emergencies” did not grant him power to impose such broad duties, reaffirming that tariff authority rests with Congress.
Although the tariffs — up to 50% on imports from India and Brazil — remain valid until October 14, the U.S. Supreme Court is scheduled to hear the matter later in the month. The outcome could either dismantle or entrench Trump’s protectionist policies, reshaping global trade flows.
Global Response: Brazil Acts, India Hesitates
The ruling has been welcomed by exporters across Asia and Latin America, who see it as the first serious challenge to Trump’s aggressive tariff stance since his return to power.
Brazil reacted with speed, unveiling a $5.6 billion support package, including tax deferrals, export rebates, and state purchases of farm goods. Its exporters quickly diverted beef shipments to Mexico, while the government escalated the fight to the WTO and prepared retaliatory measures under its Reciprocity Law.
India, by contrast, has stayed passive. With labor-intensive sectors such as textiles, leather, and engineering reeling under 50% duties, exporters are struggling to stay competitive. The lack of targeted relief has raised concerns about long-term erosion of India’s global market share.
Trump’s Stance: Defiant as Ever
Trump has brushed aside the court’s rebuke. Taking to Truth Social, he declared: “ALL TARIFFS ARE STILL IN EFFECT!” He called the ruling “highly partisan” and warned that lifting tariffs would “destroy the United States of America.”
His administration insists the duties are critical to safeguard U.S. manufacturers, farmers, and national security, arguing that reversing them could weaken foreign policy leverage.
India’s Vulnerability and GTRI’s Warning
The Global Trade Research Initiative (GTRI) has warned that India cannot afford to wait for the U.S. Supreme Court’s verdict. From an average duty of just 3% last year, Indian exports now face prohibitive 50% barriers, endangering billions in shipments.
The think tank has proposed a 10-point action plan, including:
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Reviving schemes like the Market Access Initiative and Interest Equalisation Scheme, currently suspended in FY2025.
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Implementing pending initiatives such as the Export Promotion Mission, Bharat Trade Net, and e-commerce export hubs.
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Streamlining customs clearance, RoDTEP benefits, and the Advance Authorisation scheme.
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Strengthening overseas trade missions and boosting export promotion budgets.
Without urgent reforms, GTRI warns, India risks ceding ground to faster-acting competitors such as Brazil and price-aggressive China.
Supreme Court Showdown in October
The upcoming Supreme Court hearing is expected to be a landmark test of presidential powers. A ruling against Trump could dismantle the tariffs, offering India and others breathing room. If upheld, however, it could entrench unilateral tariffs as a tool of U.S. executive policy.
The Road Ahead
For now, exporters worldwide remain squeezed by high costs and disrupted supply chains. Diversifying away from the U.S. is difficult, given compliance requirements and the scale of American demand.
Still, the appeals court’s decision has injected a dose of optimism — that global trade might once again return to a rules-based system rather than unilateral decrees. For India, though, the verdict is less a relief and more a wake-up call. The question remains: will New Delhi act quickly to shield exporters, or risk losing competitiveness in a rapidly shifting trade landscape?