Gift Nifty surged nearly 400 points from its lows on Friday after the US Supreme Court struck down former President Donald Trump’s sweeping tariffs, a move that has also triggered a rally in US equities. The US top court rejected Trump’s use of the 1977 International Emergency Economic Powers Act to impose broad-based tariffs, ruling against one of the most controversial assertions of executive authority in recent years.

The decision has significant implications for global trade flows and financial markets that have been grappling with tariff-related uncertainty. Following the ruling, Wall Street’s main indices rallied on Friday, with investors interpreting the decision as a potential reset for global trade tensions.

Trump had made tariffs a central pillar of his economic and foreign policy agenda. Shortly after beginning his second term, he imposed levies under emergency powers legislation originally designed for national crises.

In April, under what he termed “Liberation Day” tariffs, a baseline duty of 10% was slapped on all imports into the United States, along with additional country-specific tariffs ranging from 15% to 50%. While several of these were later renegotiated and reduced, the broader tariff framework had remained in place.

The tariffs were projected to generate trillions of dollars in revenue over the next decade. However, they also sparked a global trade war, strained ties with key trading partners and contributed to heightened volatility in global financial markets.

The Supreme Court’s ruling effectively dismantles the legal foundation for those sweeping levies. This development could be a potential turning point in global trade dynamics, especially for export-oriented economies and multinational corporations that had adjusted supply chains around the tariff regime.

For India, the ruling comes at a crucial time when broader markets have been facing volatility due to Fed uncertainty and slump in IT stocks. Earlier this month, India and the United States reached an interim trade understanding aimed at easing tariff tensions.Under that arrangement, the US agreed to lower reciprocal tariffs on Indian goods to 18%, while India committed to reducing certain tariffs and non-tariff barriers on American imports. That agreement had already offered some relief to Indian markets, which had faced sustained pressure amid global trade uncertainties.

Now, with the broader tariff framework struck down, the landscape could shift again. It remains unclear how the US administration will respond and whether new trade measures could be introduced under different legal provisions.