India’s equity market is likely to witness a positive start on Monday following the US Supreme Court’s decision to strike down President Donald Trump’s global tariff order.
However, the market may face uncertainty over Trump’s future course of action and his announcement that temporary tariffs on all US imports will be raised from 10% to 15%.
“This development is a significant positive for export-oriented sectors, as businesses will now be subject to a uniform 10% global import duty under Section 122 of the Trade Act of 1974 for 150 days — a provision that has been invoked for the first time. For India, the effective tariff burden is expected to ease from 25% to 10%. Although an 18% rate had been broadly agreed upon under the interim trade understanding, it was yet to be formally notified,” said Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities.
Shah added that for sectors such as IT, Pharma, Metals, Textiles and Energy stand to benefit from the reduction in tariff uncertainty. The introduction of a uniform 10% rate across countries also removes the relative disadvantage arising from differential trade arrangements with the US.
“Another important aspect to monitor is the uncertainty surrounding the approximately $175 billion collected under tariffs over the past year and the potential implications of refund claims. That said, the situation remains fluid. Any fresh statements or alternative tariff actions under different presidential authorities could reintroduce volatility in the near term,” said Shah. Going ahead, key market triggers will include the trajectory of inflation and movements in the US Dollar Index.
The US Supreme Court on February 20, invalidated Trump’s broad global tariffs in a 6-3 verdict, ruling he overreached under the 1977 International Emergency Economic Powers Act, a rare judicial limit on his agenda. Trump labelled the outcome “deeply disappointing” and quickly enacted a 10% temporary tariff on all imports under Section 122, starting February 24 for 150 days. On Saturday, he said the temporary levy would be raised further to 15%, the maximum permitted under Section 122 of US trade law.
For India, he stressed the recent US-India trade pact holds firm. India and the US recently reached an interim agreement that lowered reciprocal tariffs on Indian goods to 18%, while India agreed to reduce certain tariffs and non-tariff barriers on US imports. As of now, it remains unclear whether Indian goods would be taxed 15% or 18% in the US.
Analysts at Elara Capital said that while the US Supreme Court ruling removes a critical event for the markets, they remain sceptical about the next steps the administration may take. The intertemporal lag until the next move by the administration, (new sections, tariffs etc.) is likely to raise uncertainty among US importers and may frontload business spending and imports in 1HCY26 to take advantage of 10% tariffs, getting into wait-and-watch mode in 2HCY26.
“As usual, the randomness of the tariff announcements leaves some questions unanswered – Notably, what will happen to the negotiated trade deals, and the related subsections,” said Elara Capital in a note.
Ajit Mishra – SVP, Research, Religare Broking said that globally investors will assess the implications of the verdict announced by the Supreme Court of the United States on tariffs on Friday, February 20. “Any policy recalibration or legal interpretation affecting trade measures could have cross-border ramifications. Additionally, markets will monitor developments following a fresh executive order by the President of the United States, which may influence trade dynamics, tariff structures, and global risk sentiment. Clarity on the proposed India–US interim trade agreement, with Indian officials visiting the U.S. to finalize the legal framework, will also remain in focus,” added Mishra.
India’s equity benchmarks registered mild gains last week despite several sessions of sharp declines in the IT index. Nifty gained 0.39% during the week and settled at 25,571 on Friday. BSE Sensex advanced 015% during the week to close at 82,815.
