On April 2, 2025, U.S. President Donald Trump announced a 26% “discounted reciprocal tariff” on imports from India. This decision is part of a broader initiative imposing tariffs on various countries to address perceived trade imbalances. President Trump justified the 26% tariff by highlighting that it is half of the 52% levies he claims India imposes on American goods. He described India as “very, very tough” in its trade practices.
The tariffs are set to be implemented in two phases: a universal 10% tariff on all imports into the U.S. starting April 5, followed by the additional country-specific tariffs, including the 26% on India, effective April 9.
In response, India’s Commerce Ministry stated that it is assessing the impact of these tariffs and engaging with industry stakeholders to understand their implications. The ministry emphasized its commitment to ongoing trade negotiations with the U.S., aiming to reach a mutually beneficial agreement.
Financial markets reacted to the announcement, with Indian stock indices experiencing minor declines. The Nifty 50 fell 0.35% to 23,250.1, and the BSE Sensex dropped 0.42% to 76,295.36. IT stocks were notably affected, with the Nifty IT index plunging 4.2%, amid concerns about potential revenue impacts from a possible U.S. recession. Conversely, pharmaceutical stocks saw gains, as they were exempted from the tariffs.
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The broader international community has expressed concerns about the potential for escalating trade tensions. Countries like China, facing a 34% tariff, have indicated plans for countermeasures, raising fears of a global trade war.
