Trump's New 15% Global Tariffs: Markets React to US Court Ruling

Indian markets are anticipating a volatile start to the week following a dramatic sequence of events concerning US trade policy. On February 20, 2026, the US Supreme Court delivered a landmark ruling, striking down the sweeping tariffs that President Donald Trump had imposed under the International Emergency Economic Powers Act (IEEPA). This decision, seen as a significant setback for the Trump administration's previous trade measures, initially sparked a wave of optimism across global markets, with India's GIFT Nifty registering a substantial jump, signaling investor relief over the removal of a major trade overhang. However, this market cheer was short-lived. In a swift and defiant response, President Trump announced new tariffs within hours of the Supreme Court's verdict. He initially declared a 10% global tariff on imports from all countries, followed by an announcement on February 21, 2026, to raise this temporary levy to 15%. This new tariff is imposed under Section 122 of the Trade Act of 1974, a different legal provision than the IEEPA, and allows for duties of up to 15% for a period of 150 days, after which congressional approval would be required for their continuation. Trump indicated that during this 150-day window, his administration would explore other legally permissible avenues to implement tariffs, potentially leveraging statutes related to national security or unfair trade practices. For Indian markets, the implications are complex and multifaceted. The Supreme Court's decision to annul the previous broad-based tariffs was initially viewed as highly positive for export-oriented sectors such as gems and jewelry, textiles, marine products, and pharmaceuticals, which had previously faced tariffs, some as high as 100% on patented and branded drugs. The auto sector was also expected to see positive action. Market veterans like Gurmeet Chadha, Managing Partner and CIO at Complete Circle Consultants, welcomed the ruling, calling it especially beneficial for markets like India and suggesting a political setback for Trump that might shift focus towards boosting the economy and lowering inflation, thus reducing global uncertainty. However, the subsequent imposition of the new 15% global tariff has reintroduced an element of unpredictability. While some experts, like Nilesh Shah of Kotak Mahindra AMC, believe that markets might price in continuity, expecting the US to use various legal provisions to maintain tariffs, the rapid shift in policy is likely to trigger near-term volatility. The immediate concern for investors lies not just in the percentage of the tariff but in the overall uncertainty and the potential for ongoing policy shifts. India, which has historically been affected by US trade actions, including the revocation of its Generalized System of Preferences (GSP) status in 2019, finds itself navigating a familiar, yet renewed, landscape of trade tensions. The US-China trade war, which significantly impacted global supply chains and trade flows during Trump's first term (2018-2020), also created both challenges and opportunities for India. While India was not directly targeted by some of the highest US-China tariffs, it experienced trade diversion effects, particularly in easily substituted products like final goods, homogeneous goods, and high-elasticity goods, as US companies sought alternatives to Chinese suppliers. The current developments under Trump's second administration, which began in January 2025 and has seen a re-escalation of trade disputes, indicate a continued focus on using tariffs as a policy tool. The broader global context includes the Biden administration's decision to maintain some tariffs and add new levies on Chinese goods like electric vehicles and solar panels. Trump's campaign in 2024 proposed a 60% tariff on Chinese goods, and 2025 saw a significant escalation with tariffs reaching as high as 145% on Chinese goods from the US side and 125% from China in response, though these were later reduced after a truce. The current 15% global tariff is a distinct measure following a specific legal challenge, but it underscores a persistent aggressive stance on trade. Indian businesses will need to closely monitor developments, assess the impact on their export competitiveness, and adapt to potential disruptions in global supply chains. The unpredictability of US trade policy under the current administration remains a critical factor for both domestic and international markets.

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