Global stock markets tumbled Thursday morning as U.S. President Donald Trump announced sweeping reciprocal tariffs on major trading partners, triggering fears of an escalating trade war that could derail global economic growth. The announcement, made late Wednesday from the White House Rose Garden, imposed tariffs significantly higher than market expectations.
Indian markets opened sharply lower. Sensex opened down at 75,811.86 compared to its previous close of 76,617.44 and is currently at 76,275.78, down by 341.66 points or 0.45 per cent. Meanwhile, the Nifty opened lower at 23,150.30 against its previous close of 23,332.35 and declined to 23,237.80, losing 94.55 points or 0.41 per cent in early trade. The decline followed Trump’s announcement of a baseline 10 per cent tariff on all U.S. imports plus additional levies on countries with trade surpluses against the U.S.
“Liberation Day,” as Trump called April 2, brought the news that India would face a 26 per cent tariff on exports to the U.S., while China received a 34 per cent rate and Vietnam a staggering 46 per cent duty. The European Union will see a 20 per cent levy, with rates across various countries ranging from 15 per cent to 50 per cent.
“The tariffs imposed by the U.S. were higher than anticipated,” noted Vikas Jain, Head of Research at Reliance Securities. “Market expectations were that tariffs would range from 10-15 per cent, but the actual tariffs imposed were much steeper.”
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The announcement triggered a global market selloff. Vietnam’s index plunged 10 per cent, while markets in Australia, Japan, and China fell between 3-5 per cent. U.S. futures tumbled approximately 3 per cent, and Gift Nifty dropped 300 points or about 1.2 per cent.
“Global stock markets are plunging, and Dalal Street’s pain may just be beginning,” warned Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., identifying Nifty’s key support at 22,701.
Devarsh Vakil, Head of Prime Research at HDFC Securities, explained the broader economic implications: “The prospect of a radical escalation in the global trade war in coming days has nearly doubled the probability of a recession in the U.S. economy in the next twelve months.”
Financial markets reflected growing economic uncertainty. Gold prices surged to a record high of $3,150 per ounce as investors sought safe-haven assets. The U.S. Dollar Index fell to a six-month low of 103, while the U.S. 10-Year Bond Yield dropped to a 6-month low of 4 per cent. Oil prices declined, with Brent crude falling as much as 3.2 per cent to $72.
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“Oil fell after US President Donald Trump rolled out stiff tariffs on major trading partners that spared energy but ratcheted up a trade war that threatens global demand,” Rahul Kalantri, VP Commodities at Mehta Equities Ltd., commented.
The tariff announcement included sector-specific impacts for India, including a 15.6 per cent tariff on electronics and 11.5 per cent on gems and jewelry. However, the pharmaceutical sector emerged as a potential winner, with no specific tariffs announced for that industry. This explains why pharmaceutical stocks led market gainers, with Sun Pharma rising 4.59 per cent, Dr. Reddy’s up 3.48 per cent, and Cipla gaining 2.94 per cent.
“Pharma sector seems to have been excluded from tariffs announced by Trump administration. Key stocks with higher revenue mix from the US are Aurobindo (48 per cent), Zydus (47 per cent) and Dr Reddy’s (46 per cent),” Vakil pointed out.
Information technology stocks suffered the steepest declines, with HCL Tech falling 2.88 per cent, Infosys down 2.77 per cent, and TCS dropping 2.71 per cent as investors feared reduced U.S. market access.
Sanjay Nayar, President of ASSOCHAM, offered a relatively optimistic view: “India stands less impacted by Trump tariffs than rivals… Net-net, it appears India’s export competitiveness to the US market stands far less impacted on a relative basis.”
He added: “While we wait and watch for global reaction, for India the way forward could be a quick preferential trade deal keeping in view that President Trump still respects leadership of PM Modi.”
Analysts suggested the economic impact would be significant but manageable. “A 26 per cent tariff could have a potential impact of $30 billion on India’s gross domestic product (GDP). That would amount to about 0.7 per cent of the $4.3 trillion GDP India’s likely to have by the end of the calendar year 2025,” according to Vakil.
Technical analysts advised caution. “After opening sharply lower, short covering and buying support are expected to emerge at lower levels as the event related uncertainties are behind us,” Vakil noted. Shrikant Chouhan of Kotak Securities added, “As long as the market is trading above 23150/76000, the pullback formation is likely to continue.”
Hardik Matalia, Derivative Analyst at Choice Broking, recommended, “Traders are advised to exercise caution and wait for confirmation of price action at key levels before taking fresh positions.”
