A Constitutional Halt to the Economic Crusade: SCOTUS questions Trump’s Tariff

The striking down of the ‘reciprocal’ tariffs by the U.S. The Supreme Court is more than judicial intervention, rather, it is restoration of Article I in an era where the executive had transformed the ‘balance sheet’ into the new ‘battlefield.’

The dawn of 2025 was marked by a debacle of the globalized spirit. The 'borderless world,' wherein goods, services, capital, and ideas once flowed without friction, was abruptly tethered by the barbed wires of tariffs. The liberal world order, long romanticized as a theatre of interdependence, yielded itself as an instrument of retaliation. In this metamorphosis, trade ceased to be a conduit for prosperity and became a weapon of force, exposing the latent vulnerabilities of a world integrated yet antagonistic.

The liberal trade order, once sustained through GATT and later institutionalized under the World Trade Organization had long functioned not solely as an economic framework but as a normative ideology believing prosperity would temper conflict and integration would negate antagonism. Yet the 21st century disintegrated this premise with political fissures. The 2008 financial crisis eroded the moral authority of globalization and yet, exactly a decade later, the 2018 US-China trade confrontation normalized tariffs as strategic signaling devices rather than remedies of last resort. Under the absolution of “national security,” trade ceased to be governed solely by bilateral benefit and was restructured by power politics.

A Brief Timeline of Reciprocal Trade Escalation

From 2018 onward, reciprocal tariffs emerged as a convulsion of strategic reinterpretation within Washington's trade doctrine. The invocation of Section 301 against Chinese goods  institutionalized retaliation as policy orthodoxy. This began normalizing tariff reciprocity as a structural feature of economic statecraft rather than an exception. This was followed by an expansion of Section 232, wherein, the tariffs on steel and aluminum trade were levied under the mantle of national security. Interestingly, “security” was no longer a political rhetoric but a sovereign safeguard against perceived strategic vulnerability. 

The infamous withdrawal of the American soldiers from Afghanistan marked a broader transition line. The erstwhile protracted military engagement was conveniently replaced by economic statecraft and the geography of condensation shifted from ‘battlefields’ to ‘balance sheets.’ The disruptions caused by the pandemic in 2022-2023 accelerated reconfiguration of supply-chains, embedding “friend-shoring,” regulating export of critical minerals and semiconductors.  Thus, economic openness became increasingly conditional to geopolitical alignment in the modern Great Game. By 2024, discourses surrounding universal baseline tariffs reframed protection as fairness. Early 2025 witnessed the executive invocation of emergency powers to impose sweeping reciprocal duties, consolidating the weaponization of interdependence.

The SCOTUS Firewall: Learning Resources, Inc. v. Trump

Against this backdrop, February 2026 intervened as a moment of institutional reckoning. In Learning Resources, Inc. v. Trump, a 6:3 majority of the Supreme Court of the United States held that the International Emergency Economic Powers Act (IEEPA) did not authorize the President to unilaterally impose comprehensive tariffs absent explicit congressional approval. This judicial intervention was a much-needed halt to the economic crusade. For nearly a decade, trade authority had shifted increasingly toward the executive, enabled by lucrative interpretations of “economic emergency.” 

The legal anatomy of this decision is rooted in the ‘Major Questions Doctrine,’ Chief Justice John Roberts reasserted that the power to ‘lay and collect duties’ – the lifeblood of sovereign taxation, cannot be ambiguous used under an emergency umbrella. The IEEPA, intended for freezing assets of hostile regimes, was never meant to be a blank cheque for any executive (President) to rewrite America’s tariff ceilings. The President may command the military in the battlefield, but it is Congress that commands the commerce of the nation. While the dissenting justices warned about the perils of a ‘chained’ executive in an era of economic warfare; the Court at large chose to restore the lost equilibrium of separation of powers.

However, the demise of the 18% reciprocal tariff has not signaled a return to the status quo ante. In a prompt display of tactical agility, President Trump has already implemented Section 122 of the Trade Act of 1974, thereby levying a 10% ‘import surcharge.’ Unlike the indefinite nature of the erstwhile tariffs, the Section 122 is limited to 150 days, only unless the Congress deems necessary to intervene. The optimistic de-escalation from 18% to 10% may appear to be a de-escalation, but for global markets, it represents a state of ‘fiscal cliff.’ Economists note that the sheer unpredictability of these regime shifts is negation of accountability and certainty – the two cornerstones required for global value chain (GVC) participation. The Penn Wharton Budget Model estimates a staggering USD 175 billion (an amount equivalent to nearly 0.6 % of US GDP) fiscal liability  for the US Treasury in refunds which is a massive economic dislocation that underscores the cost of pursuing trade policy through executive overreach.

What does it mean for India?

For New Delhi, the SCOTUS ruling is both a reprieve and a riddle. The Global Trade Research Initiative estimates that nearly 55% of Indian exports to the United States, spanning from textiles, gems and jewelry, automobile components, and to select engineering goods, were directly exposed to the reciprocal tariff regime. With the invalidation of the 18% duties, these sectors regain a margin of competitiveness in a market that absorbed over USD 86 billion of Indian goods in FY 2024-25. Thus, even a modest tariff differential in labor-intensive sectors can determine allocation within global value chains.

Yet, the reprieve is accompanied by structural ambiguity. The imposition of a 10% surcharge under Section 122 (as discussed above) means that the American trade nationalism has been judicially restrained but not ideologically abandoned. For Indian exporters operating on thin margins, policy oscillation between 18% and 10% is not a complete de-escalation. It signals a momentary relief, amid the growing volatility. Global value chains prize predictability above preference and thus, moody invocation of emergency provisions followed by judicial interpretations and temporary surcharge creates precisely the ‘fear of unknown’ that deters long-term capital allocation.

However, academic circles are discerning the legitimacy of the “congressional primacy” over economic acumen of the executive. This would mean that any durable understanding between the leadership of two nations, whether an interim arrangement or a long-term framework must also withstand an additional legislative scrutiny. Thus, India’s future course of diplomacy must become bicameral – security dialogue with the White House and commercial consensus with Capitol Hill. The Indian diaspora, industry associations, and state economic partnerships assume greater salience in shaping congressional perception of bilateral trade.

Alongside, there is also a geopolitical subtext to this episode. Washington’s attempt to weaponize trade through emergency powers was partly animated by its perceived strategic insecurity with China. India, positioned as a potential alternative manufacturing and technology partner, benefits from this supply-chain diversification model. However, the judicial curtailment of unilateral tariffs signals that the United States itself remains constrained by constitutional guardrails. For New Delhi, which consistently advocates a rules based multipolar order, this reassertion of institutional balance reinforces an important normative principle, that every great power is domestically bound by the General Will.

At the same time, India must guard against complacency. Section 301, sector specific duties, export regulation on advanced technologies, and subsidy regimes under industrial policy statutes still remain in place. Protectionist sentiment in the United States enjoys bipartisan resonance, and the top leadership is a forerunner for the same, thereby complicating any ill-informed step.  Thus, the SCOTUS firewall is neither a shield nor a settlement. It is a timely reminder or a step to restore the faith of domestic citizens. For India, the task ahead lies in leveraging this moment of constitutional recalibration to institutionalize trade stability, deepen integration, and insulate its export ecosystem from the turbulence of executive improvisation. The economic crusade may have encountered a brief halt, but the geopolitics of tariffs endures…