Stock market falls as Trump threatens tariffs.
New tariffs on all steel and aluminium imports are set to take effect from Monday (US time), marking a significant escalation in trade restrictions. The initial round of tariffs will impose a 25% duty on steel and aluminium imports from all countries, with additional import duties anticipated later in the week.
President Donald Trump, speaking to reporters aboard Air Force One, confirmed the move, emphasizing the need to protect American industries from foreign competition. The new tariffs are expected to impact global markets, with businesses and investors closely monitoring further trade policy developments. The administration has not ruled out imposing tariffs on other goods, including pharmaceuticals, oil, and semiconductors.
Stock Markets Decline as Trump Threatens New Tariffs on Steel and Aluminium Imports
Mumbai: The domestic benchmark indices opened lower on Monday after US President Donald Trump threatened to impose a new 25% tariff on all steel and aluminium imports, including those from key trade partners Canada and Mexico.
Market Reaction to Tariff Announcement
The proposed tariffs, set to be implemented from Monday (US time), have sent ripples through the financial markets, with additional import duties expected later in the week. Speaking aboard Air Force One on Sunday, Trump also mentioned that he would announce reciprocal tariffs, which would take effect almost immediately.
At 9:30 am, the BSE Sensex was trading at 77,575.91, down 284.28 points (0.37%), while the NSE Nifty was down 87.95 points (0.37%) at 23,472.00. The Indian Rupee also weakened, dropping 53 paise to 87.95 against the US Dollar due to fears of heightened trade tensions.
Sectoral Impact: Steel and Pharma Stocks Hit Hard
The tariff announcement had an immediate effect on key sectors:
- Steel Stocks Drop: JSW Steel and Tata Steel led the decline, as the tariff imposition is expected to make Indian steel exports to the US more expensive and less competitive.
- Pharma Sector Down: Nifty Pharma slipped as concerns grew that the tariff war might extend beyond metals, impacting pharmaceutical exports to the US, a crucial market for Indian drug manufacturers.
- Auto and PSU Bank Stocks Gain: Amidst the downturn, Nifty Auto and Nifty PSU Bank were the only indices trading in the green, showing some resilience.
Top Gainers and Losers
Among Nifty stocks, the major gainers included:
- Bharti Airtel
- Britannia
- Hero MotoCorp
- SBI
- Kotak Mahindra Bank
On the other hand, JSW Steel and Tata Steel experienced the biggest losses following the tariff news.
Technical Analysis: Support and Resistance Levels
According to Hardik Matalia, Derivatives Analyst at Choice Broking, Nifty’s support levels are seen at 23,500, 23,400, and 23,300, while immediate resistance is at 23,700, followed by 23,800 and 24,000.
For Bank Nifty, support is at 50,000, followed by 49,700 and 49,500, while key resistance levels are at 50,300, 50,500, and 50,800.
Asian Market Trends
While Indian markets reacted negatively, Asian markets showed mixed trends:
- South Korean stocks remained flat as tech gains offset steel and auto sector losses.
- Other Asian markets were largely subdued as investors assessed the long-term impact of Trump’s tariff measures.
Foreign Institutional Investment (FII) and Domestic Institutional Investment (DII) Activity
Foreign investors continued selling, while domestic investors remained net buyers:
Global Trade Concerns and Economic Outlook
Trump’s latest move adds another layer of uncertainty to global trade relations. The imposition of broad-based steel and aluminium tariffs suggests that the US could extend protectionist policies to other sectors, including pharmaceuticals and semiconductors.
The Indian government is expected to monitor developments closely, with officials likely to explore potential trade negotiations with the US to mitigate the impact of the tariffs.
Conclusion
The markets have reacted sharply to Trump’s aggressive tariff stance, with steel and pharma stocks bearing the brunt of investor concerns. With additional tariffs expected later in the week and potential retaliatory measures from trading partners, market volatility is likely to persist.
Investors will closely watch for further developments, including US policy announcements, Asian market trends, and potential responses from global trade bodies.