‘Bloodbath’ Stock Exchange: The aftermath of Trump’s reciprocal tariffs in India

After a not-so-convincing response and official statement by the Ministry of Commerce after U.S. President Donald Trump announced reciprocal tariffs, Dalal Street in Mumbai showed the aftermath of the global trade war yesterday, April 7, which experts termed “Black Monday” in the global meltdown.

President Trump announced reciprocal tariffs on imports from about 90 nations that are above a 10% across-the-board tax applied to all imports to the U.S. on what he called a “Liberation Day” on April 2. Of all continents, Asian countries are expected to face the burnt of tariffs, with India standing at 26% while countries like Cambodia face a tax rate of 49% and Vietnam 46%. As China faces 34%, Sri Lanka – already in debt – is going to face 44% as per the announcement. 

Monday saw an unprecedented bloodbath in the markets globally, and India has no longer been behind. Reports show that at the start of the week yesterday, Indian shares opened sharply lower. Of all sectors, medical devices, telecom equipment, jewellery, textiles, and vehicular imports are going to see a massive hit. A glimpse of this has already been visible in the stock market yesterday, where Tata Motors witnessed a low of  6.7% while Tata Steel turned out to be the biggest loser at about 2:05 p.m. HCL Technologies 5.07%, on the other hand, stood at 5.07%.  

The global power that started the war, the US, also crashed on opening with 1,200 points. Additionally, the UK market fell into the red on opening with 488 points. In recent years, India saw the biggest single-day jump, with India’s Volatility Index (India VIX) surging over 59%  to 21.94.

Shahnaz Husain, the CMD of Shahnaz Husain Group, a beauty brand that has been exporting products to the U.S., says that the increased tariffs can raise costs and disrupt supply chains. “The global trade war is a reflection of shifting power dynamics and changing economic priorities across nations,” she says. However, she is hopeful and mentions that there is “a chance to strengthen regional partnerships, diversify export destinations, and focus on innovation to stay competitive.” 

Rich in the grid

The richest of the rich have also not been exempted, with Mukesh Ambani losing $3.6 billion, Gautam Adani losing $3 billion, and Savitri Jindal losing $2.2 billion.

What is the Indian government doing?

As per the Economic Times, India is working to set up an import manufacturing group to keep a tab on consumer goods and chemical imports. Reportedly, the government has asked the exporters for detailed impact assessment reports to be able to finalise the support measures. 

Meanwhile, the Indian government has mulled a 3-3.5% incentive for MSME exports under the interest subvention Scheme. Although the tariffs imposed by the U.S. do not apply to services, technical analysts claim that they might hit software services that are also exporting due to the hit on their major clients across sectors such as BFSI, manufacturing, and retail.

Commenting on how it might affect businesses, Gaurav Goel, Founder and Director of Fynocrat Technologies, says, “There are chances that US importers may reduce orders due to higher costs or shift sourcing to non-tariffed countries. This might lead to a drop in overall export volumes, especially if the US is a major trading partner.” 

He also adds that there are chances that US importers may reduce orders due to higher costs or shift sourcing to non-tariffed countries. “This might lead to a drop in overall export volumes, especially if the US is a major trading partner. The markets are likely to remain volatile in the near to medium term till the time these tariff’s related news are going on,” he adds.

How are investors looking? 

As an investor, Anand K. Rathi, who runs MIRA Money, thinks that the circumstances can change depending on how and when the tariffs are implemented, and it is challenging to predict how each country will respond to tariffs. However, Rathi also mentions that India stands out among countries and is expected to continue growing at over 6% +, and there is a reduced risk premium in the minds of investors. “It is advisable to avoid making new equity investments until the global situation stabilises,” he says.

He recommends continuing with ‘Systematic Investment Plans (SIPs)’, saying, “Any surplus investments should be directed into long-term treasury funds, such as government bonds or corporate bonds with long maturities. If there is a need to withdraw funds within the next two years, it is better to shift investments into debt instruments, such as short-term government securities or high-quality corporate bonds, even at current levels.”

America is not exempted either

The irony of the current situation is that the decisions taken by the U.S. President might not benefit his own country either. “The United States is a net importer, meaning it consumes more goods and services than it produces. Higher tariffs on imported goods will only drive up the input costs for American manufacturers, who still depend heavily on imports for raw materials, including base metals,” says Amit Modak, CEO of P N Gadgil & Sons. 

In the agricultural commodities sector, America also relies on imports, says Mr. Modak, adding that it still imports items such as wheat from Ukraine and rice from India and China. “Currently, however, what America exports is often not essential, aside from military and defence products.” He says. For example, he continues, “In India, we import chicken legs, butter, cheese, California almonds, and pistachios from the United States. These products are not essential for the Indian market. Overall, India is a net exporter to the U.S. rather than the other way around, so the impact of U.S. tariffs on our economy will be minimal.”

However, Mr. Modak points out that significant unemployment may occur in America. “As the manufacturing sector is expected to struggle under higher tariffs on imports of raw materials and components, potentially resulting in job cuts. The U.S. government is already reducing jobs; a significant job cut has been initiated by a committee led by Tesla Chairman Elon Musk. All of this is creating problems for America.”

Drawing a parallel with immigrant policy, Mr Modak says, “Reports indicated that India had more than 700,000 unauthorised immigrants residing in the U.S. We know that no more than 7,000 people returned, as he later realised and put an end to it. The same thing will happen with the tariff, as it will impose a tax on Americans, causing inflation in the U.S. to rise from 2% to 4%.”

On the other hand, Mr. Modak points out how the gold and silver prices might see a change. “Silver prices are currently declining, likely due to an impending recession caused by industrial slowdown linked to these tariff threats. However, I expect prices to rise again afterwards, as industrial recessions do not solely depend on America; other countries will eventually adjust, leading to an overall recovery outside of the U.S.” he says.

Diving into the historical record, he mentions that gold prices tend to move about stock markets. “If we look at the major corrections in gold in 2008, 2012, 2016, 2020, and the recent downturn, these corrections occurred alongside declines in the stock market. When the stock market falls, it's common for hedge funds or high-net-worth individuals to sell gold to cover losses or meet margin calls.”

‘High time we work on our production’ 

While the businesses who are majorly in direct business with the U.S are planning on the solutions, a contrary view emerges on it. Talking to Local Samosa, Abhishek Agashe, Co-founder & CEO at Elima, says that it might be a “short-term jolt for India’s export sectors”, and that may just be the wake-up call we needed. “Reciprocal tariffs may slow exports, but they can ignite domestic innovation and regenerative industrialisation. Sectors like apparel, electronics, and automotive that are highly dependent on global trade—risk losing competitiveness, but this disruption could be a silver lining for India’s circularity ambitions. 

He further adds, “I believe India now has the chance to lead by example—shifting from a take-make-dispose mindset to one that creates value out of waste. Circularity should be India’s answer.”

Although the unilateral reciprocal tariffs are certainly augmenting volatility in the global markets, their impact on India is expected to be rather limited. “Due to India's firm domestic demand and low dependence on exports to the U.S., the Indian economy seems to have been relatively insulated. Conversely, the EV sector could benefit from the reduced competitiveness of imported components, leading to increased domestic production,” says Mukesh Gupta, Marketing Head from Maxvolt Energy Industries Limited, although adding that redirected trade and increased costs may become challenges for the textile, chemicals, agriculture, and transport sectors. 

Before this, the other major crash downs included COVID-19 in 2020 where in the month of March the Sensex plunged from 41,000 hits to a low of 25,981 amidst the global uncertainties While the Global Financial Crisis (GFC) of 2008 had caused another such crash with the Sensex levels going from 21,000 levels to 8,000 by March 2009. 

The 2001-Ketan Parekh scam, which was combined with the burst of the dot-com bubble,  ensured a crash down with the Sensex, lowering to 2,594 levels from 4,200 levels in September. One of the biggest scams, the Harshad Mehta scam in 1992, saw the falling of Sensex to 2,529 from 4,467 in 1993.