Indian stock markets faced a severe jolt as escalating global trade tensions triggered by US President Donald Trump’s latest tariff offensive sent shockwaves across global equity markets. The BSE Sensex plunged 2,800 points to 72,559.88, while the Nifty 50 fell nearly 4% to 22,001.45 by 10:01 a.m. IST — marking a 10-month low for Indian equities.
The sharp drop in Indian indices was part of a broader global rout, catalyzed by Trump’s aggressive protectionist measures. His administration announced sweeping new tariffs, with country-specific duties going as high as 50%. India was hit with a 26% tariff on key exports, alongside a 10% baseline duty applied to all trading partners. Trump defended the move as a painful but necessary step to “fix something,” likening the tariffs to bitter medicine required for long-term gain.
However, global markets saw it differently. The announcement triggered a widespread sell-off in Asia, which was the first to react. The Hang Seng and Taiwanese benchmark indexes sank 10%, Japan’s Nikkei plummeted nearly 8%, and South Korea’s KOSPI lost 4.6%. Meanwhile, US futures pointed to further declines: S&P 500 futures slid over 4.3%, and Nasdaq futures were down more than 5.4%.
The chaos followed China’s swift retaliation — a 34% tariff on all US imports — intensifying fears of a global trade war spiraling out of control. Wall Street bore the brunt, with the S&P 500 closing last week with its worst performance since March 2020. Over $6 trillion in value was wiped off global equities in just days, with tech stocks leading the carnage. Tesla nosedived 10%, while Nvidia and Apple fell over 7% each. The Nasdaq 100 officially entered bear market territory.
Indian markets, already grappling with foreign outflows and inflation concerns, were not spared. The previous week had seen both the Sensex and Nifty slide by 2.6%, breaking critical support levels. The current plunge deepens worries about India’s exposure to global macro shocks, especially as its key export sectors — textiles, IT services, and pharmaceuticals — face direct impact from the new tariffs.
Strategically, India appears to be treading cautiously. While China opted for an aggressive retaliatory stance, India, along with countries like Japan, Mexico, and South Korea, is reportedly seeking diplomatic solutions. Instead of escalating tensions, New Delhi is believed to be pushing for concessions or negotiated delays in tariff implementation. This approach underscores India’s preference for long-term trade stability over short-term geopolitical posturing.
Yet, uncertainty looms large. Investor sentiment has nosedived as geopolitical risks threaten to derail economic recovery. Commodity markets mirrored this pessimism — crude oil prices slumped to 2021 levels, while copper and other industrial metals declined on fears of a prolonged downturn.
In the midst of this turmoil, Indian policymakers face a complex challenge: managing domestic economic resilience while navigating a fragmented global trade environment. With elections on the horizon and consumer sentiment sensitive to market movements, the government will need to balance diplomacy with decisive economic safeguards.
What lies ahead is contingent on whether the US and China de-escalate or double down. For Indian investors, the current environment demands caution, diversification, and a focus on fundamentals. In the short term, volatility will remain elevated. But for the long haul, India’s structural strengths — consumption-driven growth, digital transformation, and reform momentum — may yet provide a buffer.
