Sensex, Nifty down over 2% in just 5 sessions: All eyes on US Supreme Court ruling on Trump tariffs – what will it mean for markets?

Will the world continue to face US President Donald Trump tariffs or will the Supreme Court in America deem them illegal? It’s an important factor in the minds of investors world over, and Indian stock markets are also awaiting clarity on the same. While it was widely anticipated that the Supreme Court in the US will rule on the tariff issue on Friday, no ruling is lined up for today.For the past five trading sessions, Sensex and Nifty have tanked over 2% – the markets are reacting to a stalemate in the India-US trade deal negotiations, a fresh threat by Trump of higher tariffs on India, and a new bill in the US Senate which proposes 500% tariffs on countries that purchase Russian crude oil.Investors are anticipating that the decision could either trigger a sharp surge in the Sensex and Nifty or exacerbate the turbulence that has already unsettled Dalal Street in the last few days.

Ruling on Trump tariffs: What would it mean for Sensex, Nifty?

Should the Supreme Court strike down the tariffs, India could emerge as one of the main beneficiaries in the world. India currently faces a 50% tariff rate on its exports to the US. However, the recent nod by Trump for a bill that looks to impose a 500% tariff on countries importing Russian oil poses an additional threat to India’s trade competitiveness. Experts widely expect the stock market to rally in case a verdict striking down the tariffs comes.Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited says, “The US Supreme Court ruling can have profound consequences. How the ruling will impact markets will depend on the details. If the ruling is that the tariffs are illegal and the president has exceeded his authority, that will lead to serious consequences like refunding the importers who have paid the tariffs. This will widen the US deficit and increase their borrowing leading to higher bond yields. The impact of this scenario on the US stock market will be negative.”“On the contrary, countries like India which have been at the receiving end of Trump’s tariffs will benefit from such a ruling. Particularly exporters to the US will benefit. It is also possible that the Supreme Court may partially nullify the tariffs, in which case, the impact will depend on the details. Even if the ruling goes against the US administration, it is highly likely that the president and his team will resort to other means to impose tariffs. The tariff drama is likely to linger for some time,” he tells TOI.A Supreme Court decision invalidating the Trump-era tariffs could offer immediate support to global risk assets, with Indian equities standing to gain the most. Analysts note that such a ruling would lower input costs, ease trade tensions, and enhance profit visibility for export-driven sectors that have been heavily impacted by the high US duties.On the other hand, if the court upholds the tariffs, markets may experience prolonged volatility and heightened policy uncertainty. Sustained tariffs would maintain elevated supply chain costs, squeeze corporate margins, and potentially delay investment decisions. Under such conditions, experts anticipate a lack of broad market gains, with trading largely limited to individual stocks.

The 500% Tariff Sword

Market participants are also going to closely monitor not just the verdict, but its specifics: whether the court will deliver a full invalidation of the tariff regime or a partial ruling that allows some trade frictions to persist.The Russia Sanctioning Act could impose a staggering 500% tariff on nations importing Russian oil. While the measure is intended to restrict Moscow’s energy revenues, it could inflict severe collateral consequences on India.“The trade dispute between India and the US has intensified, with former President Donald Trump endorsing legislation authored by Senator Lindsey Graham that would allow a 500% tariff on countries importing Russian oil,” said Harsimran Sahni, Head – Treasury at Anand Rathi Global Finance.Since the onset of the Ukraine conflict, India has significantly increased imports of discounted Russian crude. Sahni cautioned, “If enforced, this tariff could sharply elevate the cost of Indian exports to the US, hurting trade competitiveness and straining an already fragile global economic environment.”He added, “The implications for India extend beyond trade alone. Higher tariffs could slow growth by impacting export-driven sectors, while rising energy costs might complicate inflation management. Government measures to stabilize supply and demand could affect liquidity and drive yields higher.”