Picture abhi baki hai: Why Sensex, Nifty dodged Trump’s 25% tariff bullet

US President Donald Trump announces 25% tariff on Indian goods: Market stirred, but hope remains

A big and shocking announcement in the world of international trade and politics has caught everyone’s attention. Former US President Donald Trump has announced a 25 percent import duty (tariff) on Indian goods. This duty is one of the highest taxes ever imposed on any country in Asia.

Not only this, with this decision, the Trump administration has also talked about “additional penalties” on countries having trade relations with Russia, which remains mysterious at the moment. After this statement, not only did the business class of India get a stir, but the Indian stock market (Sensex and Nifty) also saw an immediate decline.

However, the good thing was that in a short time the market recovered itself and compensated for the loss, because it is expected that by next month there can be talks about these tariffs and there is a possibility that there may be a discount or change on them.

Now let us understand this entire incident in detail – its causes, effects, and what can happen next.

Trump’s tariff decision: What is the matter?

What is tariff i.e. import duty?

When a country imports goods from another country, the government imposes an additional duty on it which is called tariff. Its purpose is to promote goods made within the country and make foreign goods expensive so that people buy only domestic products.

Why did Trump take this decision?

Trump has always followed the policy of “America First”. He believes that cheap goods coming from countries like India harm American companies and workers. He also says that India has imposed unfair trade conditions on America and now it will have to pay the price for it.

Under this, now 25% tariff will be levied on goods sent from India to America – such as textiles, medicines, steel, chemicals and electronic items. That is, if a company used to send goods worth Rs 100 to America earlier, now it will have to pay an additional tax of Rs 25 on it.

What is the “additional penalty” on trade relations related to Russia?

Trump also said in his speech that additional punitive action will also be taken against those countries which are trading or cooperating with Russia. However, it was not clarified what this penalty would be – tax, ban or something else.

Since India and Russia have deep relations in the field of military and energy, this statement can affect India, even if indirectly.

Which sectors will be most affected?

1. Textile Sector
   Clothes are the main goods exported from India to America. Especially handloom, cotton garments, home furnishing items like bedsheets, curtains etc. Due to the imposition of 25% tariff, these products will now become expensive in the American market and it may be difficult to compete with countries like Bangladesh, Vietnam.
2. Pharmaceuticals
   India is called the pharmacy of the world. Many US pharmaceutical companies import general medicines and vaccines from India. The 25% import duty will increase the prices of these medicines and can weaken the competitiveness of Indian companies.
3. Metal and engineering products
   Goods like steel, aluminum, machine parts, motor vehicle parts can also come under the purview of this tariff. This can directly affect India’s export economy.

What was its impact on the stock market?

As soon as this news came, there was an immediate reaction in the Indian stock market. Both Sensex and Nifty fell by about 1 percent. Investors felt that this was a negative sign for India-US trade relations.

However, the market recovered within a few hours, and it is believed that perhaps this decision is not permanent. In the coming month, there may be talks between the two countries regarding tariffs, in which some concessions can also be given.

What can be the response of the Indian government?

The Indian government has not yet been able to give an official response to this decision, but it is expected that:

• India can challenge this tariff in the WTO (World Trade Organization)
• Diplomatic talks can be started with the US
• In return, India can also increase taxes on American products – such as apples, almonds, motorcycles, etc.

What can be the impact on the common man?

You might be wondering what difference will this make to the common man? So let’s understand:

• Prices of medicines:
  If American companies buy expensive medicines from India, then the prices will increase there, which may anger their citizens. At the same time, the prices of some medicines can go up in India as the supply chain will be affected.
• Jobs:
  If Indian companies have less business in America, then their income will decrease and this can affect job opportunities. Especially in textile, auto and pharma sectors.
• Effect on currency:
  If exports are low, the value of rupee may fall against dollar, because less foreign currency will come.

What will happen next? Can the tariff be removed?

It is difficult to say right now how long this tariff will remain in force. But political analysts believe that:

• Some part of Trump’s statement can also be a political strategy
• Such a statement was given to please local industries in view of elections
• Relations between India and America are strong and perhaps back channel talks can be held. Solutions can be found through dialogue

Therefore, it is possible that in the coming weeks, negotiations may take place and tariff rates may be reduced or some items may be exempted.

Conclusion: Do not panic, but be cautious

This decision of Trump is definitely a warning signal for the Indian economy and especially the export industry. But this is not a decision that will change everything overnight.

This can be resolved through dialogue, policy and diplomacy.

What should we do?

• Trade people should find alternative markets for their products
• The government should start negotiations quickly
• The general public should avoid rumours and focus on solid information

Remember:
Such ups and downs keep happening in the world of global trade, but the right policy, clear dialogue and timely decisions can turn these challenges into opportunities.