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Kolkata: It won't be an exaggeration to state that the eyes of Indian policymakers, nay of the world, are fixed on the US Supreme Court today. The apex court of the country is expected to announce its ruling on the legality of the tariffs that US president Donald Trump slapped on many countries choosing his targets whimsically to suit declared and undeclared ends. While India has questioned the basis of the tariffs and their fairness, many experts all over the world and even many in the US have pointed out that they will not only deliver the intended goods but also become counterproductive for the Americans.
Needless to reiterate, one of the main reasons why the Indian stock markets have remained at the current level is the punitive tariffs of 50% slapped on India by Trump. One the one hand, the 50% tariffs are the highest in the world and on the other it has adversely impacted several labour-inensive sectors in India such as textiles, gem and jewellery, marine products, leather products, chemicals. Exports have suffered in such sectors and there is an overall gloom in the export-oriented sectors.
On April 2, 2025 Trump imposed tariffs from 10% to 50% on almost all major economies. But the decision was soon challenged in court on the grounds that under US laws the president did not have the authority to impose such tariffs. Federal courts have ruled that many of those tariffs exceeded presidential authority under extant laws. The apex court is now dealing with the matter. Reports state that the US top court will decide whether the US president can invoke the International Emergency Economic Powers Act to impose tariffs without the approval of the Congress.
Analysts point out that the Trump's tariffs triggered a significant outflow of FII investment which has resulted in the under performance of the stock markets. The FII outflow has also pulled down the value of the rupee against the US dollar which has, in turn, triggered further FII selling of Indian equities.
Market analysts obviously think if the tariffs are struck down, the decision will boost the stock markets but it might not be a rally. The cause of the cynicism is that Trump has weaponized tariffs and even if he suffers a legal reversal, he will try to find out new ways to bring them back. "It could provide some relief to the market, but the impact is likely to be limited. Even if the ruling goes against Trump, tariffs remain part of the core strategy, and alternative legal or policy routes could still be used to impose restrictions. So, at best, it may offer a minor, short-term relief to market sentiment rather than a sustained boost," Pankaj Pandey, head of research at ICICI Securities, was quoted in the media as saying.
Analysts have also pointed to the fact that the Trump administration is preparing the ground with new amendments, laws and legislative routes if the Supreme Court rules against it. Corporate earnings will be the central element to decide the course of the markets, pointed out analysts.
"A rally is possible," says Nilanjan De, financial strategist and director Wishlist Capital, adding, "it might not pave the way for a sustained bull run as we witnessed till October-November 2025." There are many triggers such as interest rates set by geopolitical risks, US Fed, corporate earnings, crude oil price level and last but not the least domestic corporate earnings growth and macro economic indicators such as GDP growth, rate of inflation etc.
tThis scenario will obviously be some sort of a dampener. However, India Inc is becoming used to the Trump tariffs by gradually striking bilateral trade agreements with different economies to find new markets. After all, the US has been the most significant tradig partner of India. While the 50% tariffs will not pose any new threat to the Indian economy or stock market, the real danger could lie in the fact that an SC nod might embolden the US president to impose new tariffs to arm twist any country for any advantage. His threat to impose new and higher tariffs against any country that engages with Iran is a case in point.
