Trump’s Reciprocal Tariffs & Its Impact on India 🇺🇸🇮🇳 Full coverage Trump is back in the White House, and India is a major target in his "Reciprocal Tariff Policy". His aggressive trade actions could shake up Indian exports, stock markets, FII flows, and the rupee. Everything you need to know about the biggest trade move of 2025 and its consequences for India. What Are Reciprocal Tariffs? ‼️Trump's "Reciprocal Tariff Executive Order" mandates: Countries that impose high tariffs on US goods will face matching US tariffs. ‼️Aimed at reducing the US trade deficit and boosting American manufacturing. ‼️India, with its high tariff structure, is one of the biggest targets. Why Is India in the Crosshairs? India has one of the highest tariff rates globally on US imports. Average Indian tariffs on US goods: 9.5% US tariffs on Indian goods: 3% Some key differences: 150% import duty in India vs. 0% in the US Motorcycles (Harley-Davidson): 100% in India vs. 2.4% in the US Medical Devices: Up to 40% in India vs. 0-5% in the US Now, the US will impose matching tariffs on Indian exports Indian Sectors That Will Suffer the Most If the US enforces reciprocal tariffs, these Indian sectors will be hit the hardest: Textiles & Apparel: exports $8B to the US annually Pharmaceuticals: US is India's largest pharma buyer (~$7B trade) IT Services: Indian IT firms generate 40%+ revenue from the US Jewelry & Gems: $10B exports from India at risk Auto Components & Steel: Facing potential 25% tariff hikes Impact on the Indian Stock Market US-India trade tensions = Bearish sentiment for Indian equities Sectors that may see a negative impact Textile & Apparel Pharma Auto & Components IT Services Sectors that may benefit: Defense & Domestic Infra Agri & Dairy (if US food imports get costlier) Energy & Oil Companies (as India imports more US energy) How Will FIIs React? Foreign Institutional Investors (FIIs) are highly sensitive to US-India trade relations. If tensions rise, FIIs may: - Exit export-heavy stocks (Pharma, IT, Auto). - Shift funds to China, Vietnam, or US markets. - Reduce overall exposure to Indian equities (leading to Nifty corrections). But if India negotiates a deal: - FIIs may stay invested and buy into dips. - Defense, domestic consumption, and energy sectors may see inflows. India’s Countermeasures – What Modiji is Doing? PM Modi has already started damage control Lowering tariffs on select US products (e.g., whiskey, almonds, defense imports). Increasing energy imports from the US (oil, LNG). Seeking middle ground through trade negotiations. Exploring alternative markets (Europe, UAE, ASEAN) to diversify exports. How Does This Align With Trump’s America First Policy? Trump wants to boost American manufacturing by reducing dependency on foreign imports. India is not the only target—the EU, Japan, and Mexico are also in the trade war. Trump believes high US tariffs = jobs coming back to the US. India has to respond strategically without escalating tensions. The Rupee Factor – Will ₹ Depreciate? Rupee may weaken due to: - FII outflows as foreign investors exit Indian stocks. - Trade deficit widening due to tariff-related export decline. - Safe-haven demand for USD, making INR weaker. How Can India Gain From This? Not all is bad! Some sectors may benefit: Defense: More US pressure = India boosts self-reliance Energy: India increasing US oil imports Agriculture & Dairy: If US food imports face tariffs, Indian brands gain. Modi’s Atmanirbhar Bharat push may accelerate due to trade barriers. Key Takeaways & What’s Next? Short-term pain: Exports hit, stock market volatile, rupee under pressure.