Tariffs, Courts and the WTO: International Trade Law After the IEEPA Ruling and What It Means for Indian Exporters

Few areas of international law have changed as quickly over the past eighteen months as the law of international trade. In that time Indian exporters have faced a reciprocal tariff of 25 per cent, an additional 25 per cent penalty linked to purchases of Russian oil, a negotiated reduction to 18 per cent, a landmark ruling of the US Supreme Court striking down the legal basis for those tariffs, a temporary global surcharge, and finally a new tariff framework built on a different statute. Meanwhile India has invoked the dispute settlement procedures of the World Trade Organization over new US duties on quartz products. This article explains the sequence of events, the legal principles at stake and the practical lessons for Indian businesses.

The sequence of events

August 2025	The United States imposes a 25 per cent “reciprocal” tariff on most Indian goods under the International Emergency Economic Powers Act (IEEPA), followed later that month by an additional 25 per cent duty tied to India’s imports of Russian crude — an effective rate of about 50 per cent.
6 February 2026	India and the United States announce a framework for an interim trade agreement. The reciprocal tariff falls to 18 per cent, several product categories are exempted, and the Russian-oil penalty is withdrawn. Negotiations on a broader Bilateral Trade Agreement continue.
20 February 2026	In Learning Resources, Inc. v. Trump, the US Supreme Court holds by six votes to three that IEEPA does not authorise the President to impose tariffs.
24 February 2026	The administration imposes a 10 per cent global surcharge under Section 122 of the Trade Act of 1974, which permits temporary duties for up to 150 days to address balance-of-payments problems.
20 April 2026	US Customs opens an automated system for refunds of IEEPA tariffs, with interest, to importers of record.
24 July 2026	The Section 122 surcharge expires. A new tariff framework under Section 301, following an investigation covering some sixty economies, takes effect the same day. India is among the partners subject to a 10 per cent rate.
14 August 2026	India requests consultations at the WTO under the Agreement on Safeguards concerning a US tariff-rate quota on quartz surface products, under which above-quota imports face duties of up to 50 per cent.

The Supreme Court ruling: a domestic check with global effects

Learning Resources is a decision of US constitutional and statutory law, not international law. Its significance lies in the principle that the power to tax — including tariffs — belongs to the legislature, and that broadly worded emergency statutes do not silently delegate it. The Chief Justice observed that IEEPA contains no reference to tariffs or duties. The ruling did not affect tariffs imposed under other statutes, such as Section 232 national-security duties on steel, aluminium and copper.

The decision illustrates a theme that recurs throughout trade law: the durability of a trade measure depends on its legal foundation. A tariff imposed under a statute designed for a different purpose is vulnerable; one grounded in a statute that expressly authorises it, with procedural safeguards, is far harder to dislodge.

The WTO framework

Under the General Agreement on Tariffs and Trade, WTO members undertake two foundational obligations: most-favoured-nation treatment (Article I), which requires that the same tariff treatment be extended to like products from all members, and tariff bindings (Article II), which prohibit duties above the rates scheduled by each member. Country-specific tariffs above bound rates are difficult to reconcile with both, unless an exception applies.

The exceptions most often invoked are national security (Article XXI), which the WTO panel in Russia — Traffic in Transit (2019) held is not entirely self-judging; safeguards, which permit temporary measures against import surges causing serious injury, subject to strict conditions and to compensation or rebalancing rights for affected members; and free trade agreements under Article XXIV, which must cover “substantially all the trade” between the parties. Whether limited, sector-specific “interim” arrangements of the kind now being negotiated satisfy that test is a live question.

The enforcement problem remains acute. The WTO Appellate Body has been unable to function since December 2019 because new members have not been appointed. A losing party can appeal a panel report “into the void”, leaving the dispute unresolved. Some members have joined the Multi-Party Interim Appeal Arbitration Arrangement as a stop-gap; India and the United States have not.

India’s quartz challenge

India’s request for consultations over the quartz measure is notable because it is framed under the Agreement on Safeguards. A safeguard is a lawful instrument, but it carries obligations: a proper investigation demonstrating increased imports and serious injury, measures limited to what is necessary, and — importantly — a right for exporting members to seek compensation and, in certain circumstances, to suspend equivalent concessions. Consultations are the first step; if they fail, India may request a panel. Even where appellate review is uncertain, the process creates leverage and a legal record that can inform bilateral negotiations.

Practical lessons for Indian businesses

• Allocate tariff risk in contracts. Incoterms, price-adjustment and change-in-law clauses determine who bears new duties. Contracts drafted before 2025 often fail to address sudden tariff changes.
• Know who can claim refunds. IEEPA refunds are payable to the importer of record. Indian exporters selling on delivered-duty-paid terms, or whose US affiliates acted as importers, should check whether they are entitled to refunds and pursue them.
• Watch rules of origin and classification. Different rates for different partners and products increase the importance of accurate tariff classification and origin documentation, and the risk of penalties for errors.
• Track sector-specific investigations. National-security and safeguard investigations — including those affecting pharmaceuticals, metals and engineered stone — can change the position for an entire industry with little notice.
• Use the trade-remedy toolkit. Indian industry can participate in foreign investigations, make representations to the Ministry of Commerce, and seek recourse at home through the Directorate General of Trade Remedies where imports cause injury.

Conclusion

The past eighteen months have shown both the fragility and the resilience of the legal order governing trade. Unilateral measures have proliferated, and the WTO’s appellate machinery remains stalled. Yet domestic courts have enforced constitutional limits, negotiated settlements have reduced rates, and multilateral procedures remain available to States that choose to use them. For Indian businesses, the lesson is that trade policy is now a legal risk to be actively managed — in contracts, in customs compliance and, where necessary, in disputes.

References

• Learning Resources, Inc. v. Trump (US Supreme Court, 2026)
• India Briefing — US and India strike interim trade deal, cut tariffs to 18%
• Kroll — A tale of tariff substitution
• ETV Bharat — India seeks WTO consultations with US over duty on quartz surface products