The back-to-back moves have left investors assessing whether this is a short-term adjustment or the beginning of another phase of trade tensions.
On Friday, the Supreme Court ruled that Trump had exceeded his authority in imposing broad-based tariffs under an economic emergency law. Markets initially cheered the decision. GIFT Nifty rallied sharply after the verdict, signalling relief that a major overhang on global trade had been removed.
However, within hours, Trump announced a 10% across-the-board tariff under a different legal provision. On Saturday, he said the temporary levy would be raised further to 15% — the maximum permitted under Section 122 of US trade law. The provision allows tariffs of up to 15% for 150 days, after which congressional approval is required for them to continue.
Trump also indicated that during this 150-day window, the administration would explore other legally permissible routes to impose tariffs, including statutes that allow import duties on grounds of national security or unfair trade practices.
For markets, the issue is less about the exact percentage and more about the unpredictability.
Nilesh Shah, MD of Kotak Mahindra AMC, said the Street is already pricing in continuity. “The Street expectation is that the US will use various provisions of law to keep tariffs almost unchanged. Any change will be short-term and, hence, unlikely to impact market direction materially.”This suggests investors may look past the headline jump from 10% to 15%, especially if they believe the overall tariff burden will not change meaningfully over time.
“Nothing wrong with 15% as far as India is concerned. There were more than 90 countries which had a 10% tariff and I guess they will all be at 15% for now. Some of them are Australia, UK, Singapore, UAE who had 10% tariff before and will now be at 15%,” Market expert Samir Arora said.
The near-term impact, however, could remain volatile. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said there are financial implications beyond the headline rates.
“An 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,” he said. “That said, the situation remains fluid. Any fresh statements or alternative tariff actions under different presidential authorities could reintroduce volatility in the near term.”
For India, the timing is significant. Indian equities have already been under pressure due to uncertainty around US Federal Reserve policy and weakness in IT stocks. Earlier this month, India and the US reached an interim trade understanding that lowered reciprocal tariffs on Indian goods to 18%, while India agreed to reduce certain tariffs and non-tariff barriers on US imports.
The earlier agreement had eased concerns and supported sentiment in export-linked sectors. Now, with a broader 15% tariff announcement on nearly all imports into the US, investors will seek clarity on how the new structure interacts with the bilateral understanding.
“India would have been happy to have a signed deal at 18% and for now it is 15%. Beyond 5 months how this will be extended is not obvious anyway and will need congressional approval. Even if finally due to other sections it does go back to 18% for India, it is same as it would have been without this recent dram,” Arora added.
