Geopolitics, financial dream and investing
|

How President Donald Trump’s reciprocal tariffs may impact India and What It Means for Your Investments

BySuman Samanta

You may have seen recent headlines about the U.S. imposing new tariffs on Indian exports.

On April 2, 2025, President Donald Trump announced a 26% “reciprocal tariff” on goods from India, effective April 9.

While this marks a significant development in global trade, we’re here to help you understand what it really means for India and for your portfolio.

President Donald Trump’s 26% reciprocal tariffs on India

Let this development be a reminder that geopolitics and investing will always intersect but your financial dream is designed to weather such events.

What’s Affected?

Key Indian export sectors like electronics, jewellery, textiles, and auto components will feel the pinch.

Fortunately, pharmaceuticals and essential industries are exempted.

What Does This Mean for India?

While some export earnings may dip, former RBI Governor Dr. Raghuram Rajan has called the U.S. move a “self-goal.”

Higher prices for Indian goods in the U.S. could reduce American demand, but it may also result in more supply here at home keeping local prices stable and possibly even lowering them.

Moreover, this situation may push India to explore new trade partnerships in Asia, Europe, and Africa diversifying our global trade footprint.

What About the Indian and Global Markets?

Short-term reactions are natural. On April 4, we saw foreign investors pull out funds, and oil prices fell over global trade concerns.

However, the Indian rupee actually strengthened a sign of resilience.

Your investments might see some volatility, especially in export-heavy sectors.

But history reminds us: staying invested through short-term noise leads to long-term growth.

India is Turning Challenge into Opportunity

  • India could use this moment to become an even more attractive hub for global trade.
  • Lowering our own tariffs, strengthening regional ties, and inviting new partnerships could set the stage for long-term economic gain.

What Should You Do?

  • No action is the best action: This is not the time to rethink your long-term roadmap.
  • Stay consistent with your SIPs: Volatility works in your favour when you invest regularly.
  • Avoid reactionary moves: The markets may react, but your roadmap is built for endurance, not emotion.