At 8.35 pm, the GIFTY NIFTY traded lower by over 150 points, indicating a lower start in the Indian markets. On Wednesday, the Nifty 50 ended at 24855.05 points, up 33.95 points. The BSE Sensex closed at 81481.86 points, up 143.91 points or 0.2%. These indices were higher for the second straight session after having closed in the red for three consecutive sessions.
President Donald Trump announced on Wednesday that the United States will impose a 25% tariff on imports from India starting August 1. He also indicated that India will face an additional, unspecified penalty on the same date, linked to the country’s trade and defense ties with Russia, but provided no further details. India is currently the world’s fifth-largest economy.Shah added, “Markets will now hope for a ‘TACO’ trade — Tariff Adjustment through Constructive Outcomes — if better sense prevails. Meanwhile, China continues to defy US and UN sanctions on Iranian oil, trade with Myanmar and Russia, and its support for North Korea. The size and competitiveness of an economy clearly provide leverage.”
What happens to the India-US mini-trade deal?
This announcement follows the conclusion of the fifth round of talks between India and the US last week in Washington, aimed at finalising a limited trade agreement.The 25% tariffs, effective August 1, are expected to impact India’s $87 billion in exports to the US, particularly in sectors such as garments, gems and jewellery, pharmaceuticals and petrochemicals. The US currently runs a $45.7 billion trade deficit with India.
Both countries aim to double bilateral trade to $500 billion by signing the first phase of a bilateral trade agreement (BTA) by October 2025.
Shah urged Indian policymakers to accelerate reforms: “I sincerely hope this unilateral move by the US acts as a catalyst for Indian policymakers to push for more growth-oriented reforms. Our biggest deterrents continue to be the scale of our GDP and our economic competitiveness.”
Stocks likely to take a hit on Thursday
The sudden jump in tariffs from zero to 25% on pharmaceuticals exported to the US could significantly affect companies like Sun Pharmaceutical, Lupin, and Dr. Reddy’s Laboratories. According to a CNBC-TV18 report, Indian pharma majors depend on the US market for over half of their exports.
The US is India’s top export destination, accounting for 17.7% of total exports in the financial year ended March 2024. Exporters of shrimp, gems and jewellery, and electronics may also face considerable pressure as the 25% tariff takes effect on August 1.
