US court blocks Trump's tariffs! What does it mean for the Indian stock market?

A US trade court on Wednesday blocked US President Donald Trump’s reciprocal tariffs announced on April 2, citing that Trump exceeded his authority by attempting to impose blanket duties on imports to the US.

The Manhattan-based Court of International Trade said the Constitution grants Congress the power to regulate international commerce, which cannot be overruled by the President’s emergency authority to protect the economy.

On April 2, Trump imposed reciprocal tariffs on the US’s trading partners. However, just a week later, many of these country-specific tariffs were put on hold.

The court order against Trump’s tariffs had a positive effect on major global stock markets; Japan’s Nikkei and Korea’s Kospi surged 2 per cent. Indian stock market benchmark Sensex also jumped over 500 points but lost steam soon. Around 12:10 PM, the benchmark index traded 23 points lower at 81,289.

What does the blocking of Trump’s tariffs mean for the Indian stock market?

Experts say the blocking of Trump’s tariffs by the US federal court is positive news for markets.

“This court ruling is the second big blow to President Trump after the blow delivered by the bond market, which forced the Trump administration to pause the tariffs for 90 days. From the market perspective, this is a positive development,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Trump’s aggressive tariff policy has raised the risk of higher inflation and lower economic growth in the US. The US Federal Reserve in its last policy meeting flagged that inflation risk has risen due to tariffs, and the world’s largest economy was staring at an uncertain future.

The minutes of the US FOMC May policy meeting highlighted that Fed officials believe inflation will rise and the job market will weaken significantly this year.

Wednesday’s court order is overall a positive development. However, it has created some uncertainty about the ongoing trade talks with the US, which may weigh on market sentiment. In the context of India, it is even more complex since the country was actively engaged in talks with the Trump administration after the US had secured a temporary deal with China and delayed tariffs on the European Union.

Experts say the US court order is not a major positive trigger for the Indian stock market, as Trump’s tariffs were not expected to significantly impact the Indian economy. Besides, due to the trade talks between India and the US, the market seems to have discounted the possibility of a limited impact of Trump’s tariffs.

“India was not expected to be impacted badly by the US tariffs because the US’ trade deficit with India is only around $45 billion. We are not heavily dependent on the US for goods exports. Since the bilateral talks were going on, the market had already discounted a minimal impact of Trump tariffs,” said G Chokkalingam, the founder and head of research at Equinomics Research Private Limited.

According to commerce ministry data, in FY25, India recorded a trade surplus of $44.4 billion in goods and services with the US. India exported $86.5 billion in goods and $28.7 billion in services to the US while importing $45.3 billion and $25.5 billion, respectively.

However, according to Global Trade Research Initiative (GTRI), US claims of a deficit in its bilateral trade with India are misleading. It said the US earns $80–85 billion annually from India through sectors such as education, digital services, finance, intellectual property, and even arms.

Experts say that at this juncture, the market seems to be focusing more on domestic factors and less on global cues.

What weighs on the Indian stock market?

The Sensex has been down for three consecutive sessions on profit booking amid concerns over stretched valuations and a rebound in the US dollar.

While the domestic market looks poised for a healthy gain in the long term due to the prospects of durable economic growth and a strong influx of retail investors, investors are booking profits after the market has seen gains for three consecutive months. Year-to-date, the Sensex and the Nifty 50 have gained 4 per cent and 5 per cent, respectively.

“It looks like retail investors are booking profits. The market capitalisation has recovered almost 60 lakh crore since the February lows. Those who invested in February are sitting at a decent profit. Some of them could be booking profits,” said Chokkalingam.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.