The legal battle over US President Donald Trump’s reciprocal tariffs has intensified after a federal appeals court ruled that the levies were imposed illegally under emergency powers. In a 7–4 decision issued on Friday, the US Court of Appeals for the Federal Circuit concluded that the International Emergency Economic Powers Act (IEEPA) was never intended to authorise tariffs, declaring it “illegal”.
The ruling upheld an earlier decision by the Court of International Trade in May, which also found the tariffs unlawful. However, the judges stopped short of striking them down immediately, leaving the duties in place while litigation continues.
Trump slapped 50% punitive tariff on India earlier this month for continuous buying of Russian oil.
Why India tariff not covered by the court ruling?
Trade lawyer Mollie Sitkowski of Faegre Drinker Biddle & Reath LLP clarified in a client note that the judgment does not directly apply to India or Brazil, reports Bloomberg. Both countries were subjected to tariffs under separate provisions of the emergency law, and Sitkowski said those measures, along with the removal of the de minimis exemption for imports valued under $800, remain unaffected by Friday’s decision.
Her assessment comes amid speculation in New Delhi that the verdict may provide relief to Indian exporters facing a 50% levy. For now, the outcome largely concerns tariffs imposed on Mexico, Canada and China, which Trump had justified on grounds of trade deficits and the fentanyl crisis.
The court’s decision has thrown uncertainty over trillions of dollars of trade agreements negotiated during Trump’s presidency. In a Bloomberg report, Wendy Cutler, a former senior US trade negotiator now with the Asia Society Policy Institute, said that trading partners “must be dazed and confused,” with some nations having signed framework deals and others still negotiating terms under the shadow of tariffs that may ultimately be overturned.
A final ruling against the duties could trigger demands for hundreds of billions of dollars in refunds for companies and consumers who have already paid the levies. Democratic-led states and small businesses that brought the lawsuit hailed the verdict as a step towards correcting what they described as an unlawful abuse of presidential power.
Political and economic stakes
New York Attorney General Letitia James, part of the coalition challenging Trump’s policy, said the tariffs were “a tax on Americans,” fuelling inflation and job losses. Family-run firms such as Learning Resources Inc., which previously won a separate case against the IEEPA tariffs, said the ruling vindicated their long-standing arguments.
The Trump administration, however, has argued that striking down the tariffs could undermine US foreign policy. Treasury Secretary Scott Bessent warned the appeals court that removing them would cause “dangerous diplomatic embarrassment” and weaken trade talks. Trump himself took to social media to declare that eliminating the tariffs would be “a total disaster for the Country.”
Implications for India and Asia
While India is not directly covered by the ruling, trade watchers say New Delhi will closely monitor developments. Cutler observed that India “must be rejoicing” at the setback for Washington, which could strengthen its hand in negotiations. She added that Japan, Korea and the European Union may also reconsider the pace of their ongoing talks with the US until greater legal clarity emerges.
For Pakistan, Brazil and other nations, the uncertainty only deepens. But for India, the message from experts is clear that despite the court ruling, the high tariffs on its goods remain in place at least for now.