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Trump tariffs: US President Donald Trump announced sweeping reciprocal tariffs on the trading partners of the world's largest economy on April 2. Trump's ‘Liberation Day’ announcements had no country-specific exclusions as he announced new tariff rates for more than 180 countries. Apart from country-specific tariffs, Trump also announced the imposition of a 10 per cent baseline tariff.
Track Donald Trump Tariff Announcement Live Updated Here However, he imposed reciprocal tariffs at only half the rate other countries charge on US products. Still, this was enough to unsettle the market, as Dow Jones Futures tumbled more than 1.5 per cent after the tariff announcement.
He announced a 26 per cent reciprocal tariff on India—half the rate India imposes on US imports. Besides, Trump announced a 25 per cent tariff on automobile imports to the country, which is likely to impact auto stocks such as Tata Motors and Samvardhana Motherson. How could Trump tariffs impact the Indian stock market? Trump's tariffs could trigger an immediate negative reaction, as reflected in Gift Nifty's 1.
5 per cent drop. Sectors like IT and automobiles may face selling pressure, but in the medium to long term, the market is likely to absorb the impact. However, experts point out that Trump's tariff may not have a significant negative impact on the economy, which is a comforting factor for the domestic market.
India's trade surplus with the US is not significant. According to India Brand Equity Foundation (IBEF), in FY24, India had a trade surplus of $36.8 billion with the US.
Indian exports to the US stood at $77.5 billion, while American exports to India stood at $40.7 billion in FY24.
According to experts, India’s exports in the most vulnerable sectors amount to only 1.1 per cent of India’s GDP. Some experts highlight that Trump announced reciprocal tariffs at only half the rate that other countries impose on US products.
This has left room for negotiation rather than retaliation. "The tariff of 26 per cent on India is not excessive compared to tariffs on other countries like China, Taiwan, Sri Lanka and Bangladesh. The market is likely to respond negatively.
With a possible bilateral trade agreement between India and the US, tariffs are likely to come down," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. According to Narinder Wadhwa, Managing Director & CEO of SKI Capital Services, the Indian stock market typically reacts negatively to protectionist US policies, as they increase global risk aversion. FPIs could reduce exposure to emerging markets, leading to volatility.
Moreover, risk-off sentiment could weaken the rupee, affecting imported inflation and companies with foreign debt. Major sectoral impact Trump's tariffs could not impact Indian businesses in general but the sectors with high exposure to the US markets. According to brokerage firm Motilal Oswal, India’s top exported items to the US are electronics (15.
6 per cent of total exports to the US), gems and jewelry (11.5 per cent), pharma products (11 per cent), machinery for nuclear reactors (8.1 per cent) and refined petroleum products (5.
5 per cent). "While the reciprocal tariffs introduced by Trump is seen with some dismay by India Inc., the impact remains more sectoral than general for Indian businesses," said Amit Sarkar, Partner, Bhuta Shah and Co LLP.
"Higher import tariffs would remain impacted on US-centric businesses such as pharma, iron and steel, electronics hardware, and auto parts," said Sarkar. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint.
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