India Tariffs Cut To 10% As Donald Trump Faces US Supreme Court Setback

India now faces a reduced tariff rate of 10 per cent, down from 18 per cent, after US President Donald Trump imposed a new global levy on items imported into America following a Supreme Court verdict against his sweeping tariffs, delivering a stinging rebuke of his signature economic policy. After signing the new tariff order, Trump said on social media that it was "effective almost immediately."

The new duty is slated to take effect on February 24 for 150 days, with exemptions remaining for sectors under separate probes, including pharma, and for goods entering the US under the US-Mexico-Canada agreement, according to a White House factsheet.

Trump imposed new tariffs under Section 122 of the Trade Act of 1974, which empowers the President to address certain fundamental international payment problems through surcharges and other special import restrictions.

Section 122 authorises the US president to impose temporary tariffs of up to 15 per cent for a maximum of 150 days to address what the law describes as "large and serious" US balance-of-payments deficits—situations where imports significantly exceed exports.

What Happens To Already Signed Trade Deals

The White House said that US trading partners, like India, that reached tariff deals with the United States after Trump's tariff diktat will now also face a 10 per cent duty, despite the higher levels they may have agreed on previously.

But a White House official told news agency AFP that the Trump administration would seek ways to "implement more appropriate or pre-negotiated tariff rates" down the line.

The United States and India earlier this month announced they reached a framework for an interim agreement on trade after Trump issued an executive order removing the 25 per cent punitive tariffs imposed on India for its purchases of Russian oil and reduced the reciprocal duties on New Delhi from 25 per cent to 18 per cent.

Given this new tariff rate of 10 per cent, which will be applicable to countries around the world, Indian goods being imported into the US would no longer be subject to the 18 per cent tariff rate that had been decided on following the announcement of a framework for an interim agreement on trade between India and the US.

But the tariffs imposed under Section 122 will automatically expire after 150 days unless Congress votes to extend them. While the time limit is explicit, trade experts noted that a president could allow the measures to lapse and potentially reintroduce them by declaring a fresh balance-of-payments emergency.

The Trump Administration said it is committed to continuing implementing the President's trade policy, which was at the core of his campaign and agenda.

What Trump Said On India-US Trade Deal

The US court's ruling effectively removed the legal basis for the 18 per cent reciprocal tariff imposed on India. The legal shake-up would have seen India's tariffs drop to 3.5 per cent, which New Delhi was paying before Trump's move, as Most Favoured Nation (MFN) status.

However, Trump moved quickly and signed an order mandating a new 10 per cent tariff on imports from all countries, including India.

Speaking at the White House after the Supreme Court verdict, Trump said the India-US trade deal is still on. 

"I think my relationship with India is fantastic, and we're doing trade with India," he said. 

When asked if the Supreme Court verdict will affect the trade deal with India, Trump said, "Nothing changes."

"They'll be paying tariffs, and we will not be paying tariffs. So the deal with India is they pay tariffs. This is a reversal of what it used to be," Trump said.

"The India deal is on...all the deals are on, we're just going to do it" in a different way, he added.

The Supreme Court Ruling

Earlier Friday, the conservative-majority high court ruled six to three that a 1977 law Trump has relied on to slap sudden rates on individual countries, upending global trade, "does not authorise the President to impose tariffs."

Trump, who had nominated two of the justices who repudiated him, responded furiously, alleging without evidence that the court was influenced by foreign interests. The court said that Trump could not impose tariffs in peacetime using the five-decade-old International Emergency Economic Powers Act (IEEPA).

The justices ruled that "had Congress intended to convey the distinct and extraordinary power to impose tariffs" through the 1977 law, the International Emergency Economic Powers Act, "it would have done so expressly, as it consistently has in other tariff statutes."

"IEEPA contains no reference to tariffs or duties," Chief Justice John Roberts said in his opinion.

The ruling did not impact sector-specific duties Trump separately imposed on steel, aluminium and various other goods. Government probes still underway could lead to additional sectoral tariffs. Still, it marked Trump's biggest defeat at the Supreme Court since returning to the White House 13 months ago. The court has generally expanded his power.

Trump's Reaction

After the verdict, Trump told reporters, "I'm ashamed of certain members of the court, absolutely ashamed, for not having the courage to do what's right for our country."

"In order to protect our country, a president can actually charge more tariffs than I was charging in the past," Trump said, insisting that the ruling left him "more powerful."

Treasury Secretary Scott Bessent, addressing the Economic Club of Dallas, said the alternative method "will result in virtually unchanged tariff revenue in 2026."

Businesses Cheer

Wall Street saw share prices rise modestly after the decision, which had been expected. Business groups largely cheered the ruling, with the National Retail Federation saying this "provides much-needed certainty" for companies.

Doubts On Refunds

The Trump administration in court arguments said companies would receive refunds if the tariffs were deemed unlawful. But the ruling did not address the issue. Trump said he expected years of litigation on whether to provide refunds. Justice Brett Kavanaugh, the one Trump nominee to side with him, noted the refund process could be a "mess."

The University of Pennsylvania's Penn Wharton Budget Model projected that the court decision on tariffs would generate up to $175 billion in refunds.

California Governor Gavin Newsom, who is widely expected to seek the Democratic presidential nomination in 2028, said Americans deserved refunds from the "illegal cash grab."

"Every dollar unlawfully taken must be refunded immediately -- with interest. Cough up!"

But Elizabeth Warren, the top Democrat on the Senate Banking Committee, cautioned that there remained "no legal mechanism for consumers and many small businesses to recoup the money they have already paid."

The Budget Lab at Yale University estimates consumers face an average effective tariff rate of 9.1 per cent with Friday's decision, down from 16.9 per cent.

The rate "remains the highest since 1946," excluding 2025, it said.

Close US trading partners, including the European Union and Britain, said they were studying the decision.