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Markets Plunge as Trump Imposes 25% Tariff on India

Trump 25% Tariff India

Trump 25% Tariff India: Indian markets opened with sharp declines after former U.S. President Donald Trump announced a 25% tariff penalty on Indian imports. The move rattled investor sentiment, leading to broad-based sell-offs in key indices.

India-US trade deal: Will India face 20-25% Trump tariffs from August 1?  Top 10 things to know - Times of India

Image: Times of India

Markets React Sharply to US Tariff Shock

On July 31, 2025, the Indian stock market witnessed a steep drop as benchmark indices Sensex and Nifty opened in the red. The sharp decline followed Donald Trump’s surprise announcement of a 25% tariff on Indian imports. The decision, which he described as a response to India’s continued purchase of Russian oil, has triggered global market anxiety and disrupted the India–US trade equation.

The BSE Sensex crashed over 900 points at open, while the Nifty 50 tumbled below the 22,000 mark. Traders across Dalal Street pointed to geopolitical concerns and trade uncertainty as the primary reasons behind the heavy sell-off.

Why Did Trump Impose the Tariff?

Trump’s return to the global spotlight came with a strong message. In a late-night press briefing, he declared that India had violated the spirit of US sanctions by continuing to buy discounted Russian oil. According to him, the 25% tariff penalty aims to pressure India into aligning with broader Western trade policies.

Additionally, Trump hinted that this tariff might be the first in a series of trade actions targeting nations “uncooperative with U.S. strategic goals.”

Impact on Indian Equities

The announcement sent shockwaves through equity markets, particularly affecting sectors reliant on exports and US-linked revenues. IT, pharma, and auto stocks were among the biggest losers in early trade. Heavyweights like Infosys, TCS, and Mahindra & Mahindra fell over 2% each, dragging indices further.

On the other hand, oil marketing companies and domestic-focused sectors saw mild resilience, reflecting hopes that India might pivot trade focus away from the US.

Investor Caution Prevails

Market analysts are urging caution. According to Aditya Sharma, Head of Research at a leading brokerage:

“While this move is politically motivated, the market will wait for India’s response. Until clarity emerges, volatility will remain high.”

Foreign institutional investors (FIIs), who had been net buyers in the past few sessions, turned aggressive sellers in early trade. Moreover, the India VIX (Volatility Index) spiked over 15%, signaling rising fear in the market.

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What’s Next for Indian Markets?

Much now depends on the Indian government’s response. If New Delhi retaliates or halts US trade negotiations, market volatility could increase further. However, if diplomatic talks resume quickly, a rebound may follow.

Until then, traders are likely to adopt a risk-off approach. Gold prices rose nearly 1.2% as investors sought safe havens, while the Indian rupee weakened against the US dollar.

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