What Happened
- On February 20, 2026, the US Supreme Court (SCOTUS) ruled 6-3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not authorise the President to impose tariffs.
- The ruling invalidated the sweeping "reciprocal/Liberation Day" tariffs Trump had imposed on most countries using IEEPA, while leaving intact sector-specific tariffs imposed under separate legal authorities (steel, aluminium under Section 232; semiconductor tariffs under distinct orders).
- Chief Justice Roberts held that Trump's reading of IEEPA would give the President "unbounded" tariff power and constituted a "transformative expansion" of executive authority — the Constitution assigns tariff-setting power exclusively to Congress under Article I, Section 8.
- Justices Thomas, Kavanaugh, and Alito dissented.
- Trump immediately responded by imposing a 10% global tariff under Section 301 of the Trade Act of 1974 (a different legal authority), later raised to 15%.
- SBI Research noted the ruling could reduce global policy uncertainty over time but create a complex interim phase, as countries navigate counter-intuitive strategies — some may delay finalising trade deals to see if Congress legislates new tariff authority for the President, while others may rush to lock in agreements before any new tariff legislation.
Static Topic Bridges
The International Emergency Economic Powers Act (IEEPA), 1977
IEEPA is a US federal law enacted on December 28, 1977, that authorises the President to regulate international commerce after declaring a national emergency in response to an "unusual and extraordinary threat" originating outside the United States. It was passed by Congress as part of broader reforms under the National Emergencies Act (NEA) of 1976, designed to clarify and limit presidential emergency powers previously held under the Trading with the Enemy Act, 1917. IEEPA grants broad powers — including blocking transactions, freezing assets, and restricting imports/exports — but requires the emergency declaration to be renewed annually.
- Enacted: December 28, 1977 (signed by President Jimmy Carter)
- Purpose: Regulate international commerce during declared national emergencies
- Annual renewal requirement: Under the National Emergencies Act (NEA), 1976
- Previous uses: Sanctions on Iran, North Korea, Russia, Myanmar (asset freezes, not broad tariffs)
- February 2026 SCOTUS ruling (Learning Resources, Inc. v. Trump): IEEPA does not authorise tariffs
Connection to this news: Trump's use of IEEPA to impose sweeping reciprocal tariffs on virtually all trading partners — framing the trade deficit as a "national emergency" — was the legal basis that SCOTUS struck down. The ruling draws a constitutional boundary on executive tariff-setting power.
Constitutional Division of Tariff Authority in the United States
The US Constitution (Article I, Section 8) grants Congress the exclusive power to "lay and collect Taxes, Duties, Imposts and Excises," which includes tariffs. Over the 20th century, Congress progressively delegated tariff-setting authority to the executive branch through various statutes, creating the current system where the President can modify tariffs within legislatively defined parameters. The SCOTUS ruling in Learning Resources, Inc. v. Trump reaffirms that Congress cannot delegate unlimited tariff authority to the President — such broad delegation violates the non-delegation doctrine and the constitutional allocation of fiscal powers.
- Constitutional tariff authority: Congress — Article I, Section 8, Clause 1
- Key trade statutes granting limited presidential authority:
- Trade Act of 1974 — Section 201 (safeguard tariffs), Section 301 (unfair trade practices), Section 232 (national security)
- Trade Expansion Act of 1962 — Section 232
- Non-delegation doctrine: Congress cannot grant the executive "an intelligible principle" that is so broad as to be unlimited
- SCOTUS case: Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026), decided February 20, 2026
- Vote: 6-3; authored by Chief Justice Roberts; dissent by Thomas, Kavanaugh, Alito
Connection to this news: Understanding the constitutional framework explains why Trump pivoted immediately to Section 301 of the Trade Act of 1974 — a statutory authority that was not challenged in the SCOTUS case — to maintain global tariffs and avoid a complete tariff collapse.
India's Exposure to US Tariff Volatility
India is the US's 9th largest trading partner by goods trade volume, with total goods trade of ~$129 billion in 2024. India's goods exports to the US face exposure to US tariff changes directly, and India is simultaneously negotiating an interim bilateral trade deal whose tariff provisions depend on the prevailing US legal framework. The SBI Research assessment highlights that the SCOTUS ruling introduces a period of "counter-intuitive" negotiation — India may adopt a wait-and-see approach on finalising the interim deal text, while assessing whether Congress will legislate new tariff authority, and whether the Trade Act of 1974-based tariffs will be challenged legally.
- US-India goods trade (2024): ~$129 billion
- India's goods exports to US (2024): ~$87 billion
- Pre-ruling IEEPA tariff on India: 26% reciprocal + 25% Russia-penalty (briefly as high as 50%)
- Post-deal, pre-ruling tariff reduction: 18% (February 2, 2026)
- Post-ruling tariff applicable to India: 18% (15% global under Section 301/Trade Act + 3.4% MFN rate)
- Key Indian export sectors exposed: pharmaceuticals, gems & jewellery, textiles, engineering goods, IT services
Connection to this news: SBI Research's framing of a "complex interim phase" is directly applicable to India — the legal uncertainty about the tariff basis creates ambiguity in cost projections for Indian exporters and for the bilateral trade deal negotiators.
Key Facts & Data
- SCOTUS case: Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026)
- Ruling date: February 20, 2026
- Vote: 6-3 (Roberts, majority; Thomas, Kavanaugh, Alito dissented)
- Law struck down for tariffs: IEEPA (International Emergency Economic Powers Act, 1977)
- IEEPA enacted: December 28, 1977
- IEEPA requires annual renewal under: National Emergencies Act (NEA), 1976
- Constitutional tariff authority: Congress — Article I, Section 8
- Trump's replacement tariff legal authority: Section 301, Trade Act of 1974
- Replacement global tariff rate: 10% (announced Feb 20) → raised to 15% (Feb 21, 2026)
- Tariffs unaffected by ruling: Steel/aluminium (Section 232), semiconductor tariffs (separate orders)
- US-India goods trade (2024): ~$129 billion; US deficit: ~$45.8 billion