A US appeals court has ruled Trump tariffs declared illegal, impacting India’s economy. On Friday, August 29, 2025, the US Court of Appeals for the Federal Circuit, in a 7-4 decision, declared most of President Donald Trump’s tariffs, imposed under the International Emergency Economic Powers Act (IEEPA), illegal, citing overreach of presidential authority. The ruling, announced in Washington, DC, targets “reciprocal” tariffs on global imports, including those on India, and could reshape US trade policy.
Why It Matters for South Asia
The ruling significantly affects India, the US’s largest export market, where tariffs of up to 50% were imposed on goods like textiles and gems. With 87% of India’s $86.51 billion exports to the US potentially impacted, this decision could ease economic pressure but introduces uncertainty for Indian exporters navigating global trade shifts.
Impact of Trump Tariffs Declared Illegal on the Indian Economy
The court’s decision invalidates tariffs imposed on April 2, 2025, including a 10% baseline on all imports and a 50% levy on Indian goods, partly due to India’s $52 billion in Russian oil imports. Indian officials estimate that sectors like pharmaceuticals, automotive, and textiles, which employ millions, face significant risks. The Confederation of Indian Textile Industry reported a “full stop” in orders, threatening livelihoods in hubs like Tiruppur. Indian External Affairs Ministry on X stated: “India will take all necessary steps to protect its national interests.”
The ruling, which stayed until October 14, 2025, allows the Trump administration to appeal to the US Supreme Court. Indian exporters, already reeling from order cancellations, may see temporary relief, but prolonged legal battles could sustain economic uncertainty. Economists like Santanu Sengupta from Goldman Sachs warn that sustained tariffs could reduce India’s GDP growth below 6%, from a projected 6.5%.
Trump’s Response to the Ruling
President Trump, reacting on Truth Social at 3:15 AM on August 30, 2025, called the decision a “total disaster for the country,” claiming it would weaken the US economy. He argued that tariffs protect American workers and predicted a Supreme Court reversal. According to Trump on Truth Social: “If these tariffs ever went away, it would be a total disaster for the Country.”
Legal Basis of the US Court Ruling
The Federal Circuit ruled that the IEEPA, enacted in 1977, does not explicitly grant the president authority to impose tariffs, a power reserved for Congress under the US Constitution. The 127-page judgement stated: “The statute does not mention ‘tariffs’ or provide procedural safeguards for such powers.” This follows a May 2025 ruling by the US Court of International Trade, which also deemed the tariffs illegal but was paused pending appeal.
The decision impacts tariffs on Canada, Mexico, and China, imposed to curb drug trafficking, but spares those under Section 232 (e.g., steel and aluminium). Legal experts suggest the case, dubbed “America’s Big Case” by Trump, is likely headed to the Supreme Court, where six of nine justices are Republican-appointed, including three by Trump.
Implications for Indian Exports
India’s exports, valued at $86.51 billion in FY25, face uncertainty. While pharmaceuticals and smartphones are currently exempt, Trump has threatened future tariffs of up to 150% on drugs. The 50% tariff, effective August 27, 2025, has disrupted textiles, gems, and shrimp exports, with Andhra Pradesh farmers reporting a 30-40% drop in shrimp larvae production. Indian negotiators are exploring relief measures, including interest subsidies and new market access, to mitigate losses.
Global and Regional Trade Dynamics
The ruling could shift global trade, with rival exporters like Vietnam and Bangladesh facing lower US tariffs, gaining market share. India’s government has announced a $28 billion programme over six years to support exporters, but trust in US-India trade relations, built over 25 years, is strained.
What’s Next
The Trump administration has until October 14, 2025, to appeal to the Supreme Court, which may decide if the tariffs are within presidential powers. For India, the outcome will shape export strategies and bilateral ties, with potential retaliatory measures if tariffs persist. The impact of trump tariffs declared illegal on the Indian economy remains a critical issue to watch.
Published in SouthAsianDesk, August 30th, 2025
Follow SouthAsianDesk on X, Instagram, and Facebook for insights on business and current affairs from across South Asia.
