Nifty 50 Falls Over 200 Points After Trump Announces 25% Tariff and Penalty on India

Nifty today saw a sharp selloff as the index plunged more than 200 points, following an announcement by US President Donald Trump of a 25 percent tariff on Indian goods and an additional penalty for trading with Russia and over India’s BRICS partnership. From the previous close of 24,855.05, the Nifty 50 was down by 0.85 percent, or 220 points, reflecting investor concern over deteriorating trade relations and uncertainty about negotiations. Over the past year, the Nifty 50 is marginally lower, down by approximately 1 percent, and in the last month, the index corrected by about 3 percent as the market had anticipated further delays in the much-discussed India-US trade deal. This tariff escalation comes after months of negotiations, with analysts widely expecting that a breakthrough would be delayed given the growing complexity around geopolitical alliances and sectoral disagreements.

The US move to impose a tariff on Indian imports drew criticism when compared to the rates assigned to other major US trade partners. For context, the tariff rates for the European Union and the UK are in the range of 15 percent and 10 percent, respectively. At the same time, Southeast Asian competitors like Indonesia, the Philippines, and Vietnam have tariffs of 19 to 20 percent, all markedly below India’s new rate. China and the US are still negotiating, and while they have extended, Malaysia matches India’s 25 percent. The US has linked India’s penalties not only to the trade deficit but also to India’s ongoing engagement with Russia for oil and military equipment and its partnership in BRICS, which the US considers against American interests.

Bilateral negotiations have been drawn out, with several sticking points slowing progress. Some of the main topics from the US include zero-duty access to Indian markets for select goods, mirroring earlier pacts with Vietnam and Indonesia, and reciprocal Indian requests to cap the new US tariff at 15 percent. Political expectations, investment commitments, and disagreements over agriculture and dairy access have proven difficult to reconcile. The US wants India to open up key domestic sectors, while India seeks to protect its farmers and small businesses. Indian negotiators are, however, prepared to show flexibility on public procurement, which is similar to the approach taken in the UK deal, while keeping the most sensitive segments insulated.

President Trump, despite his confrontational stance, stated that the US is “still negotiating with India” and indicated he remains open to a resolution if India undertakes “substantial” tariff cuts. He reaffirmed the ongoing nature of trade talks, making clear that the elevated tariffs are also a negotiating tactic and that a final decision is still subject to continued discussions. India, for its part, has maintained a measured response, with the government highlighting that “deals take time” while drawing reference to the recently completed India-UK Comprehensive Economic and Trade Agreement, which took over three years from negotiation to signature. Indian officials reiterated their intent to press on for a trade agreement with the US, now targeting a resolution by September, as per various sources.

Importantly, the immediate economic impact of the US tariffs on India is likely to be modest, as US-bound exports account for a relatively small share of India’s overall trade basket. However, the potential exists for major gains if India secures a reduced tariff, which would boost the competitiveness of Indian goods, especially in sectors like electronics, pharmaceuticals, textiles, and jewellery, where US market access can drive significant growth. India’s strategic goal in these talks is not only tariff reduction but also establishing a foundation for greater technology and investment flows between the two countries.