Trump’s Tariffs Threaten to Crash India Stock Market Party Amid US Trade Deal Hype

Nifty 50 Plunges Nearly 400 Points as Experts Warn Against Trade Deal Euphoria

The Indian stock market took a beating last week, with the Nifty 50 index sliding nearly 400 points from its weekly high, closing below the critical 50-DEMA support level of 24,900. As uncertainty swirls around the much-hyped India-US trade deal, experts are sounding the alarm, urging investors to temper their excitement and brace for the harsh reality of US President Donald Trump’s looming tariffs.

The market’s wild ride has sparked fears of further declines in both major and broader indices, prompting analysts to caution retail investors against getting swept up in the trade deal buzz. While the agreement could bring a short-lived boost to Dalal Street, Trump’s aggressive tariff policies might overshadow any gains, potentially leading to more market turmoil.

Avinash Gorakshkar, a SEBI-registered market analyst, advised caution, saying, “The India-US trade deal is about balancing the interests of both economies. Investors need to watch closely to see if it protects India’s key sectors like IT, pharma, and textiles. If it falls short, we could see another big crash on Dalal Street.”

Why the India-US Trade Deal Hype Might Be Misleading

Gorakshkar highlighted the stark reality of Trump’s tariffs, even if the trade deal goes through. “Last December, the average US tariff on imported goods was just 2.5%. Now, with tariffs expected to hit 15-20%, that’s a sixfold jump—the highest since the 1930s,” he said. This steep increase could hit Indian exporters hard, regardless of any deal.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, emphasized the importance of relative tariffs. “It’s not just about the absolute tariff rate but how it compares to our competitors. The US has slapped 19% tariffs on Indonesia and 20% on Vietnam. Tariffs above 15% are likely for most countries,” he explained. If India can negotiate a rate between 15% and 20%, it might be a win, but expectations of low tariffs that boost exports are unrealistic under Trump’s “Make America Great Again” focus. Even countries like the UK, with a 10% base tariff, face higher rates on goods like steel and aluminum.

The Hard Truth About Trump’s Tariffs

US Treasury Secretary Scott Bessent recently projected that tariff revenues could hit $300 billion this year, roughly 1% of US GDP. Looking ahead, a 15% tariff on last year’s $3.3 trillion in US goods imports could rake in nearly $500 billion—about 1.5% of GDP. These numbers underscore the scale of Trump’s tariff push, which could reshape global trade and hit markets hard.

India-US Trade Talks: A Game-Changer or a Mirage?

Arvind Panagariya, Chairman of the 16th Finance Commission, struck an optimistic note, calling the proposed India-US trade deal a major boost. Speaking at an event in New York last week, he said, “This agreement, along with a potential India-EU deal, will open up the world’s two largest markets for India. It’ll make India a magnet for investors by reducing trade barriers—an absolute game-changer.”

Panagariya believes that once the US deal is sealed, an EU agreement will follow, paving the way for smoother trade and investment flows. However, with Trump’s tariffs casting a long shadow, investors are left wondering if the promised benefits will materialize or if the market’s recent euphoria is setting the stage for disappointment.

Also Read: Big Dividends and Stock Splits to Grab This Week — Wipro, Maruti, Bosch & More