This week, global markets were rattled by a fresh wave of trade tensions triggered by new US tariffs, leading to sharp declines across Wall Street and Asian indices. While Indian markets also witnessed a steep drop, they showed notable resilience. In contrast to its neighbour China, India has taken a more cautious approach to navigating the tariff issue. Let’s take a deep dive into India’s strategy for tackling the tariff shock.
New Delhi: Tariff hike, global market meltdown, and trade war were some of the buzzwords that dominated the headlines this week. April 7 brought several key global indices to their knees as Wall Street registered a 52-week low at the start of trade on Monday. The fallout was the outcome of a reciprocal tariff announcement by US President Donald Trump on April 2. Asian markets were also hit hard; however, compared to other major economies, India did not feel the impact as much, at least for now. The Bombay Stock Exchange (BSE), which plunged over 3,000 points during early trade on Monday, showed some recovery to close the day down by just over 2,000 points.
The days that followed saw extreme global reactions, not-so-in-favour of Mr Trump, who insisted that his tariff move was doing “really well” for the US and his administration amid the fear of recession.
But with China, things got a bit too far. The tariff war that began in February gradually took the shape of a trade war between these two countries as they kept increasing tariffs in a tit-for-tat move. From 10% in February, the Trump administration kept on increasing the tariffs as currently it stands at a whopping 145%. China, too, has retaliated with a counter-tariff of 125% on US goods. Not only this, the US, in a bid to tame the dragon, announced a pause on tariffs for 90 days, except for China.
India, in the meantime, did not take China’s route of retaliation and chose a path of dialogue and trade talks. Firstly, the tariffs on New Delhi were comparatively lower than a few major economies, and secondly, Trump has been, so far, favourable to India’s approach to tariff hikes. India was slapped with a 26% reciprocal tariff; however, after the announcement of a pause for 90 days, the country only needs to pay a 10% baseline tariff for now.
Trump’s Tariffs Rattle World Markets — India Falls Least
The Indian market has shown resilience at a time when global indices are finding it tough to negotiate with Trump’s tariff shock. On April 7, the BSE Sensex plunged by 2,226.79 points or 2.95% to close at 73,137.90 and the Nifty 50 declined by 742.85 points or 3.24% to end at 22,161.60.
Compared to India, the Shanghai Composite tumbled over 8% intraday before closing 7.3% lower. Hong Kong’s Hang Seng Index posted a historic 13.2% crash — its steepest fall since the 2008 global financial crisis. Japan’s Nikkei 225 closed 7.8% lower, while Taiwan’s benchmark index recorded a staggering 9.7% decline, the worst in its history. Australia’s ASX 200 and South Korea’s Kospi were also hit hard, losing 4.2% and 5.6%, respectively.
Sensex looks set on its way to recovery as the Indian equity markets bounced back with strong momentum on April 9, adding Rs 7.32 lakh crore to investor wealth. The benchmark BSE Sensex surged 1,089.18 points or 1.49% to close at 74,227.08. On April 11, Indian equity markets surged as the Nifty 50 and BSE Sensex logged gains of over 1,100 points and 385 points, respectively in early trade.
India’s Way of Handling Tariff Shock
So far, India has taken a cautious approach as the focus seems to be on negotiations and bilateral trade talks to navigate the current tariff storm. As nations rush to adjust to the shifting tides of US trade policy — especially after Donald Trump’s sudden 90-day tariff pause following weeks of tough talk — India’s more insulated approach appears to have cushioned it from the shocks that have rattled more trade-reliant economies.
We are working on a bilateral trade agreement as was decided between Prime Minister Modi and US President Trump in February… We had a series of engagements, all of which are going in the right direction. We are covering a wide area of subjects and products. I can assure businesspersons across the country that we are keeping India’s best interests at the forefront… Our bilateral trade agreement will power the economy towards Viksit Bharat 2047
– Piyush Goyal
