06-08-2025
- Business
- New Indian Express
Market under pressure as Trump tariff offsets RBI's expected rate cut pause
India's equity market closed slightly lower on Wednesday as investors grew cautious following US President Donald Trump's threat on Tuesday to substantially raise the tariff on Indian goods within 24 hours. This was in response to India's continued imports of Russian oil. Trump acted on his word and on Wednesday signed an executive order imposing an additional 25% tariff on India, raising the total tariff on Indian goods imported by the US to 50%.
Experts believe this tariff increase will negatively impact India's outbound trade to the US, which is valued at nearly $100 billion. The move is also expected to affect the earnings of many companies that derive a significant portion of their revenue from exports to the US.
Sunny Agrawal, Head of Fundamental Research at SBI Securities, told TNIE that the market may open flat or slightly lower on Thursday with a negative bias. This is because the tariff will apply only after 21 days, creating uncertainty about whether and when it will actually come into effect.
'By allowing 21 days, Trump is keeping the negotiation window open, which is likely to provide some relief to investors. I also feel most negative cues are already factored in,' said Agrawal. He added that sectors like Gems & Jewellery and Textiles, which have maximum exposure to the US market, have seen sharp corrections in recent sessions.
Regarding pharma companies, Agrawal said, 'It is difficult to predict the impact because imposing taxes on medicines is not easy for any country.'
Concerns over escalating US-India trade tensions overshadowed the Reserve Bank of India's (RBI) decision to keep the repo rate unchanged at 5.5%, a move that was widely anticipated by markets.
