Lagatar24 Desk
New Delhi: Equity markets in India tumbled on Monday, and the rupee hit an all-time low of 87.29 against the US dollar after US President Donald Trump imposed heavy tariffs on Canada, China, and Mexico over the weekend. The move has sparked fears of a global trade war, overshadowing the optimism surrounding the Union Budget 2025.
At 11 AM, the BSE Sensex was down by over 400 points, trading at 77,084, while the Nifty 50 dropped to 23,320, losing more than 160 points.
Among the major losers in the 30-share blue-chip index were Larsen & Toubro, NTPC, Tata Steel, Power Grid, Tata Motors, Reliance Industries, ICICI Bank, and Tata Consultancy Services. On the other hand, Titan, Maruti, Nestle, and Bajaj Finserv were among the few gainers.
Markets React to Trump Tariffs
Experts believe that despite a positive Budget, Trump’s trade war stance has spooked investors.
“Despite an excellent Budget, the market will be under pressure from the Trump tariffs and the heightened global uncertainty these ‘initial round of tariffs’ has triggered,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Vikram Kasat, Head of Advisory at PL Capital, highlighted the shock among investors, adding that the near-term market trajectory will depend on how investors react to this potentially damaging move for economic growth.
Other Asian markets also took a hit, with South Korea, Japan, and Hong Kong witnessing sharp declines.
Rupee Hits Record Low Amidst Foreign Fund Outflows
The rupee fell below 87 for the first time, dropping 0.6% to 87.1450 per dollar on Monday. The currency has declined nearly 4% since October 2024, mirroring weakness in other Asian currencies, including the Korean won, Malaysian ringgit, Indonesian rupiah, and Thai baht, which fell between 0.9% and 1.2%.
Trump’s Tariff Shock and Global Fallout
On Saturday, Trump imposed:
• 25% tariffs on Canada and Mexico
• 10% tariffs on China
Defending his decision, Trump stated:
“We need to protect Americans, and it is my duty as President to ensure the safety of all. Americans overwhelmingly voted in favor of stopping illegal aliens and drugs from crossing our borders.”
Despite concerns over economic pain, Trump argued that his move would ultimately “Make America Great Again.”
Global Retaliation Against US Tariffs
Canada, Mexico, and China swiftly responded to Trump’s trade measures:
• Canada: Prime Minister Justin Trudeau announced 25% retaliatory tariffs on $106 billion worth of American goods.
• Mexico: President Claudia Sheinbaum Pardo ordered “Plan B” trade defense measures against the US.
• China: Announced plans to challenge Trump’s tariffs at the World Trade Organization (WTO).
Meanwhile, Trump also warned the European Union (EU) of upcoming tariffs, stating that the bloc has “taken advantage of the US for too long.” The EU, in response, vowed to “respond firmly” if tariffs are imposed.
Uncertain Future for Markets and Global Trade
With fears of a full-blown trade war escalating, investors remain cautious. The market trajectory will largely depend on how countries negotiate trade agreements in the coming weeks and whether further economic retaliation follows.
