US Court Blocks Trump Tariffs: Impact on Indian Market & Global Trade
In a landmark verdict, the U.S. Court of International Trade ruled that President Donald Trump exceeded his authority by invoking emergency powers to impose sweeping tariffs and halted most of Trump's tariffs from taking effect.
The decision not only blocks the so-called “Liberation Day” tariffs in their tracks, but also sets the stage for broader legal challenges to executive-led trade actions. Motilal Oswal Financial Services outlines why this judgment could reshape global trade dynamics, and what it could mean for India.
Legal brake on tariffs could ease U.S.-India trade talks
“A pullback in U.S. tariff aggression creates space for India to strengthen trade positioning,” said Motilal Oswal. With Trump’s 26% reciprocal tariff threat now under legal cloud, India may gain leverage in its ongoing trade negotiations with Washington, especially as it offers deep tariff cuts on non-sensitive goods.
Indian exporters may benefit as supply chains de-risk from China
Motilal Oswal noted that exporters in sectors like pharma and textiles could benefit if the ruling weakens the U.S.'s reliance on China-centric trade strategies. “Exporters in pharma, textiles, may benefit if global supply chains de-risk from China,” the brokerage said, pointing to India as a natural beneficiary of any diversification shift.
Markets cheer legal clarity, Indian equities open higher
The decision triggered a positive sentiment wave in equities. “Markets may not react sharply as the original tariffs’ economic impact was limited,” Motilal Oswal said, “but this sets a big precedent for future administrations.” On Thursday, the Nifty 50 rose 0.29% while the Sensex climbed 0.34%, reflecting early optimism.
Court ruling triggers repricing in safe-haven assets
The risk-on mood hit safe-haven assets. Gold fell 0.7% to its lowest in over a week, while the U.S. dollar strengthened. According to Motilal Oswal, “Emergency powers are now under tighter judicial scrutiny,” leading investors to recalibrate expectations on trade-linked uncertainty and favour risk assets.
Tariff agility curbed for future administrations
Motilal Oswal highlighted that the U.S. court's verdict “sets a precedent that may reduce future tariff agility — even in genuine crises.” With the court rejecting the use of a decades-old law to justify economic penalties, executive freedom over trade has now come under structural limits, adding new layers to trade policymaking.
Legal uncertainty could shift the U.S.-China trade equation
The judgment introduces a new legal dimension to U.S.-China trade tensions. “U.S.-China trade tensions could enter a new phase of legal uncertainty,” Motilal Oswal observed, implying that geopolitical trade decisions may face more institutional checks, opening indirect windows of opportunity for competitors like India.
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