In a big decision that could affect the world economy, the U.S. Supreme Court has struck down former President Donald Trump’s tariff policy. These tariffs were earlier imposed on many imported goods using emergency powers.
Now, experts from SBI Research say countries should follow a “counter-intuitive” approach while dealing with the United States. But what does all this mean? Let’s understand it in simple words.
What Are Tariffs?
A tariff is a tax placed on goods coming from another country. For example, if the US places a tariff on steel from another country, that steel becomes more expensive in America. Governments use tariffs to:
- Protect local industries
- Reduce trade deficits
- Pressure other countries during trade disputes
During his presidency, Donald Trump used tariffs as a major tool in trade policy.
Why Did the Court Strike Them Down?
The tariffs were imposed using a law called the International Emergency Economic Powers Act (IEEPA). This law allows the US President to act during national emergencies.
However, the Supreme Court said that this law was not meant for broad, long-term trade tariffs in normal situations. In simple words, the Court felt that emergency powers were being used in the wrong way.
Because of this ruling, the old tariff structure based on IEEPA is no longer valid.
What Did the US Government Do Next?
After the ruling, the government did not remove tariffs completely. Instead, it used another law — the Trade Act of 1974, especially Section 122.
Under this new move:
- A 10% tariff has been announced on many global imports.
- It will start from 24 February 2026.
- It can stay for 150 days (around 5 months).
- If the government wants to extend it, Congress must approve.
This means tariffs are still there, but under a different legal system.
Are There Any Exceptions?
Yes, some goods are not affected.
Products under the US-Mexico-Canada Agreement (USMCA) are exempt. This agreement connects the US with Canada and Mexico in trade. Some national security-related tariffs are also unchanged.
So, not every country or product will face the new 10% tariff.
Why Is This Important?
The United States is one of the biggest economies in the world. When it changes trade rules, it affects many countries.
Here’s why this decision matters:
1. It Creates Uncertainty
Businesses don’t like uncertainty. When trade laws keep changing, companies don’t know how to plan future investments.
2. Congress May Now Have More Power
Earlier, many tariff decisions were taken by the President. Now, Congress may have more control. Since Congress is politically divided, future decisions may take longer.
3. Global Markets May React
Stock markets and investors watch trade news closely. Changes in tariff laws can affect prices, jobs, and business confidence.
What Is the “Counter-Intuitive” Approach?
SBI Research says countries should not rush into strong reactions. Instead, they should:
- Stay calm and avoid trade fights.
- Wait for political clarity in the US.
- Focus on long-term trade relations.
- Reduce overdependence on one country.
This strategy may feel unusual because many countries respond quickly to tariffs. But patience could bring better results in the long run.
Can the US Use Other Laws for Tariffs?
Yes. Even though IEEPA was restricted, the US can still use other laws like:
- Section 301 – For unfair trade practices.
- Section 232 – For national security reasons.
So tariffs are not fully gone. The government still has options.
What Does This Mean for India?
India trades heavily with the United States. So this decision can affect Indian exports.
Possible Benefits:
- Trade rules may become more transparent.
- Less use of emergency powers may bring stability.
Possible Challenges:
- The new 10% tariff may increase export costs.
- Future investigations could target specific sectors.
Indian businesses will need to adjust carefully.
The Bigger Picture
This court ruling shows that even powerful leaders must follow legal limits. It also highlights the balance between the President and Congress in shaping trade policy.
In the future:
- Trade policies may become more law-based.
- Sudden tariff announcements may reduce.
- Countries may prefer stable agreements over quick actions.
Conclusion
The U.S. Supreme Court’s decision to strike down Trump’s tariff framework is a major moment in global trade. While the US government has introduced a temporary 10% tariff using another law, the situation remains uncertain.
SBI Research advises countries to take a smart and patient approach instead of reacting emotionally. Global trade is entering a new phase, where legal clarity and political balance will play a bigger role.
For businesses and governments around the world, the key lesson is simple: stay prepared, stay flexible, and think long-term.
