The recent ruling by the U.S. Supreme Court striking down the reciprocal tariffs imposed by former U.S. President Donald Trump has been welcomed by many trade experts and exporters across the globe. For India, the verdict initially appeared to signal relief in ongoing trade tensions. However, trade analysts and export data indicate that the reality is more complex.

While the reciprocal tariffs have been declared invalid, several other U.S. tariffs remain in place. These include duties on steel, aluminium, and restrictions on items valued below 800 dollars, which continue to affect both large and small Indian exporters. In addition, the much-anticipated India-U.S. Interim Trade Agreement has not yet been signed, leaving uncertainty in bilateral trade relations.

This situation presents a mixed picture for Indian exporters who were expecting broader relief following the court decision.

Supreme Court Ruling on Reciprocal Tariffs

On February 20, the U.S. Supreme Court ruled that President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs exceeded his authority. The court held that invoking emergency economic powers to levy tariffs on multiple countries, including India, was not legally justified under the existing framework.

As a result, the reciprocal tariffs were struck down.

The decision has been viewed as a significant check on executive power in trade matters. Legal experts in the United States described it as a landmark ruling that clarifies the limits of presidential authority in economic policy decisions.

For Indian exporters, especially those operating in sectors directly affected by reciprocal tariffs, the verdict provides some relief. However, the ruling does not automatically remove all trade barriers imposed during the past year.

Other Tariffs Still in Place

Despite the Supreme Court’s decision, the United States continues to impose several other tariffs that significantly affect Indian exports.

Steel and Aluminium Tariffs

The U.S. has maintained tariffs on steel and aluminium imports from multiple countries, including India. These tariffs were introduced earlier under national security provisions and have not been directly impacted by the Supreme Court ruling.

India is a notable exporter of steel products to the U.S., including specialised and value-added steel. The continued tariffs reduce price competitiveness and impact margins for Indian manufacturers.

Industry representatives say that while large integrated steel producers may be able to absorb part of the cost, small and medium enterprises (SMEs) face greater challenges.

Aluminium exporters are in a similar position. The tariffs make Indian products more expensive in the U.S. market, forcing companies either to cut profits or lose orders to competitors from countries with lower trade barriers.

Tariffs on Low-Value Imports Below 800 Dollars

Another major concern is the tariff policy affecting imports valued below 800 dollars. Earlier, shipments below this threshold often enjoyed duty-free access under de minimis rules. However, recent policy changes have tightened these provisions.

This measure significantly affects small Indian exporters, especially those engaged in e-commerce platforms selling handicrafts, textiles, fashion accessories, and small electronic goods.

For many startups and small businesses, the U.S. market offers direct-to-consumer sales opportunities. Increased compliance requirements and tariff costs have added operational complexity and financial strain.

Trade analysts believe this shift disproportionately affects small exporters who lack the scale and resources of larger corporations.

Impact on Indian Export Sectors

The combined impact of these tariffs varies across sectors.

Steel and Metals Sector

The steel industry has been one of the most directly affected sectors. With tariffs raising the landed cost of Indian steel in the U.S., exporters face stiff competition from domestic American producers and suppliers from countries with preferential agreements.

While some companies have diversified export markets, the U.S. remains a critical destination due to its size and purchasing power.

Textiles and Apparel

Indian textile exporters also face challenges. Although textiles were not always directly targeted under steel or aluminium tariffs, broader trade tensions and compliance costs have indirectly affected demand.

Small textile exporters relying on low-value shipments to U.S. customers are particularly vulnerable under the revised sub-800 dollar tariff norms.

Engineering and Auto Components

The engineering goods and auto components sectors are also closely watching developments. Even minor tariff changes can affect long-term supply contracts and pricing agreements.

Exporters in these sectors stress the importance of predictable trade policy for maintaining stable business relationships.

Interim Trade Agreement Still Pending

Another critical element in the India-U.S. trade equation is the proposed Interim Trade Agreement.

Over the past year, both countries have engaged in discussions to address tariff disputes and improve market access. However, the agreement has not yet been finalised or signed.

The delay in signing the Interim Agreement creates uncertainty. Exporters were expecting that the agreement might resolve at least some of the ongoing tariff concerns.

Trade experts believe that a formal agreement could:

• Provide clarity on tariff structures

• Improve market access for Indian goods

• Address non-tariff barriers

• Create dispute resolution mechanisms

Until such an agreement is signed, exporters must operate within the existing tariff regime.

Broader India-U.S. Trade Relations

India and the United States share one of the most significant bilateral trade relationships in the world. The U.S. is among India’s largest export destinations.

Key Indian exports to the U.S. include:

• Pharmaceuticals

• Textiles

• Engineering goods

• IT services

• Gems and jewellery

• Agricultural products

Tariff changes in the U.S. market therefore have a direct impact on India’s overall export performance.

Although services trade remains relatively unaffected by goods tariffs, merchandise exports are sensitive to policy shifts.

Mixed Reactions from Trade Analysts

Trade analysts describe the Supreme Court ruling as a partial victory for exporters. While it removes one layer of tariffs, it does not eliminate all barriers.

Some analysts argue that the decision may improve the broader trade atmosphere and encourage renewed negotiations between the two countries.

Others caution that unless structural trade issues are addressed, Indian exporters will continue to face uncertainty.

Legal and Political Implications

The Supreme Court’s decision has both legal and political implications in the United States.

By limiting the use of emergency economic powers, the ruling sets a precedent for future administrations. It signals that tariff policies must align with constitutional and statutory boundaries.

For India, this may mean that sudden tariff actions based on executive authority are less likely in the future.

However, tariffs introduced under other legal provisions remain unaffected.

Challenges for Small Exporters

Small and medium enterprises are among the most affected by the ongoing tariffs.

Unlike large corporations, SMEs often lack:

• Dedicated compliance teams

• Large financial buffers

• Diversified export markets

Increased tariff costs and regulatory requirements can significantly reduce profit margins.

Industry associations have urged the Indian government to provide support measures, including:

• Export incentives

• Easier credit access

• Faster GST refunds

• Trade facilitation assistance

The Way Forward

The coming months will be crucial for India-U.S. trade relations.

Several factors will influence the future direction:

1. Progress on the Interim Trade Agreement

2. U.S. domestic political developments

3. Global economic conditions

4. WTO-related trade disputes

5. Currency fluctuations

If the Interim Agreement is signed, it could ease tensions and provide long-term clarity.

In the meantime, Indian exporters are adapting by:

• Diversifying export destinations

• Improving product value addition

• Strengthening supply chain resilience

• Exploring regional trade agreements

Conclusion

The striking down of reciprocal tariffs by the U.S. Supreme Court marks an important legal development. However, it does not bring complete relief to Indian exporters.

Tariffs on steel, aluminium, and low-value imports continue to impact various sectors. The pending India-U.S. Interim Trade Agreement adds another layer of uncertainty.

For Indian exporters, the situation remains complex. While the legal ruling improves the trade climate, structural tariff barriers still require diplomatic negotiation and policy reform.

As bilateral discussions continue, businesses on both sides await clearer signals that will define the future of India-U.S. trade relations.

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