Impact of US Tariffs on Indian Economy: Trump's New Tariffs Affect India's Economy

US President Donald Trump has announced a 25% import duty on certain goods imported from India. Additionally, he indicated punitive action on crude oil purchased by India from Russia, which has had an immediate impact on the Indian stock market and currency.

In the early morning session on Thursday, the main index of the Mumbai Stock Exchange, Sensex, fell by 582.49 points to 80,899.37. At the same time, the Nifty index also dropped by 151.70 points to close at 24,802.45.

Slight Improvement in Rupee Against Dollar

The rupee was trading at 87.66 against the dollar at the start of the session, which was the lowest level in the past few months. There was an improvement of 14 paise, and on Wednesday, the rupee had reached a record low of 87.80.

According to foreign currency traders, this was the largest single-day drop in the past three years – a drop of 89 paise. Experts believe that the likelihood of intervention by the Reserve Bank of India has increased.

Impact of Global Events

The Dollar Index – which shows the strength of the US dollar against six major currencies – has fallen by 0.03% to 99.78. This means there is a slight softness in the dollar, but pressure on the rupee remains.

Decline in Foreign Investment

Foreign institutional investors (FII) sold shares worth more than 850 crore rupees in the market on Wednesday, increasing further volatility in the stock market. The impact of the Federal Reserve not cutting rates was also felt in the market.

Trade Agreement Discussions Underway

Discussions are underway on the trade agreement between India and the United States. Exporters are having to wait, and this agreement could be significant in the context of tariffs and penalties.