Trump's reciprocal tariffs from today; Indian market on high alert, gold price soars to 68,080

KOCHI: As US President Donald Trump’s decision to impose reciprocal tariffs on Indian products is set to take effect today, the economic sector is on high alert. The tariffs, which will apply to each country, will be announced by Trump at 3 PM US time (12:30 AM IST on Thursday), according to the White House.

Following this development, gold prices in India surged by Rs 680 per sovereign, reaching a record Rs 68,080, as investors sought safe-haven assets.

Stock market investors suffered losses exceeding ₹3 lakh crore in assets. The benchmark index, Sensex, plummeted by 1,390 points, closing at 76,024.51. The National Stock Exchange’s Nifty index lost 353.65 points, ending at 23,165.70.

Trump's decision to impose tariffs, equivalent to those imposed by India, is expected to reduce exports by $7.3 billion. However, Trump also announced that India would receive certain tax exemptions. The Indian government and exporters remain hopeful that the US might reconsider the tariff hike at the last minute and engage in new trade negotiations.

There is still no clarity on whether the additional tariffs will apply sector-wise or product-wise. Reports suggest that Trump is preparing a second phase of sanctions against Russia and Iran, which has also driven crude oil prices higher.

From 2021-22, the United States has been India’s largest trading partner, accounting for 18% of India’s total exports, while India’s imports from the U.S. account for only 6.22%.

Will sabotage India's gain
India enjoys a $35.32 billion trade surplus with the US, whereas the US has a $45.70 billion trade deficit with India. Trump's tariff decision aligns with his broader strategy to impose additional taxes on all countries, causing trade deficits for the US, including China.

India currently imposes an average tariff of 9.5% on US goods, while Indian goods face an average tariff of just 3% in the US. India is the country imposing the highest tariffs on American products.

Indian products facing higher tariffs under Trump’s decision
Vehicle tires, alcohol, fish and meat, frozen seafood, footwear, gold, silver, and diamonds, engineering products, leather and textiles and pharmaceuticals

US products seeking tax reductions in India
Industrial products, automobiles, alcohol, petrochemical products, and agricultural goods, including dairy products