U.S. President Donald Trump has announced a reciprocal tariff policy that has sent shockwaves across global markets, particularly in Asia. India, among other nations, has been hit hard as Trump imposed a hefty 26% tariff on its exports. The announcement has triggered a sharp sell-off in Asian markets, raising concerns about potential ripple effects on the Indian stock market as well.
Trump’s Tariff Bomb and Its Global Impact
Trump’s reciprocal tariff declaration has been termed “Liberation Day” by the U.S. President. He outlined the new tariff rates for various countries: 34% on China, 20% on the European Union, 24% on Japan, and 26% on India. This sudden move has rattled investors, with Asian stock markets experiencing significant declines.
Asian Stock Markets in Turmoil
Following Trump’s announcement, Japan’s Nikkei Index took a severe hit, plunging over 4.6% to reach 34,102 points, marking its lowest level in the past eight months. The U.S. has imposed a 24% import duty on Japan, further exacerbating market fears. India’s GIFT Nifty also tumbled by more than 200 points in early trading.
South Korea’s Kospi Index also suffered, slipping around 3% after opening, while Hong Kong’s Hang Seng Index was down at 23,094 points, falling deep into the red zone. Australia’s S&P/ASX 200 index also dropped by 1.55% amid the widespread sell-off.
Stocks That May Face the Biggest Impact
According to Business Today Markets analyst Ankur Sharma, Nifty and Sensex are likely to witness a gap-down opening. The auto, IT, and pharma sectors are expected to be the hardest hit. The pharma sector, in particular, may bear the brunt of the tariff hike as the U.S. is a major market for Indian pharmaceutical exports. An increase in tariffs could potentially lead to a decline in export revenue.
Additionally, the IT sector is under scrutiny as Trump’s tariff policy hints at potential duties on IT services, a major contributor to India’s exports to the U.S.
Stock Market Rally Before the Tariff Shock
Just a day before Trump’s tariff announcement, the Indian stock market had witnessed a remarkable rally. The BSE Sensex had surged from its previous close of 76,064.94 to 76,680.35 at the market open, gaining nearly 600 points during trading and closing at 76,617.44, up by 592.93 points.
Similarly, the NSE Nifty opened higher at 23,192.60, after closing at 23,165.70 in the previous session. It surged to 23,350 before closing at 23,332.35 with a gain of 166.65 points.
Auto Sector Faces Major Setback
The auto sector has been one of the worst affected, with major U.S. automakers seeing steep declines. General Motors plummeted over 7%, while Ford dropped 4.6%, and Stellantis lost 4%. Japanese automakers like Nissan, Toyota, and Honda also saw their stocks slide by 2-3%. South Korean automakers Hyundai Motor and Kia experienced a nearly 4% decline.
As global markets react to Trump’s tariff policy, all eyes will be on how India and other affected nations respond. The impact on trade, business sentiment, and market performance will be closely monitored in the coming weeks. Investors and analysts remain cautious, anticipating potential countermeasures and further market volatility.
