US President Donald Trump’s recent announcement of new U.S. tariffs on Indian goods sent shockwaves through the stock market. Indian investors watched in panic as the Sensex and Nifty plunged, wiping out a part of their market value. With uncertainty about future relations between the US and India, many are wondering: Will these tariffs crash your portfolio? Should you shift your investments or wait it out?
The Tariff Shock: What Happened?
On April 3, 2025 (IST, 1:30 AM), the U.S. President Donald Trump announced a sweeping tariff policy, dubbed "Liberation Day," imposing a universal 10% import tariff on all countries, effective April 5.
Here are the US tariff rates imposed by the Trump Administration on April 2, 2025.
| Country | Tariff % | Country | Tariff % |
| Australia | 10% | Brazil | 10% |
| Bangladesh | 37% | Chile | 10% |
| China | 34% | Cambodia | 49% |
| European Union | 20% | Indonesia | 32% |
| India | 26% | Japan | 34% |
| Malaysia | 24% | Singapore | 10% |
| South Korea | 25% | South Africa | 30% |
| Switzerland | 31% | United Kingdom< | 10% |
| Vietnam | 46% | Turkey | 10% |
| Taiwan | 32% | Thailand | 36% |
Subsequently, a 26% reciprocal tariff specifically targeting Indian exports was announced, set to commence on April 9, though its implementation was temporarily suspended for 90 days pending ongoing trade negotiations.
These tariffs threatened key Indian export sectors, including gems and jewellery, textiles, electronics, and auto parts, with potential losses estimated at $5.76 billion. Notably, pharmaceutical exports were exempted, acknowledging their critical role in global healthcare.
The immediate market reaction in India was severe: stock indices like the Sensex and Nifty plunged over 2%, erasing approximately ₹11.30 lakh crore in investor wealth, reflecting heightened investor anxiety over the escalating trade tensions.
Market Fallout: How Bad Was It?
In early April 2025, Indian stock markets experienced a significant downturn following the announcement of sweeping tariffs by U.S. President Donald Trump.
On April 7, the BSE Sensex plummeted nearly 4,000 points in the live stock market, while the Nifty 50 index fell below the 21,750 mark, marking one of the sharpest single-day declines in recent history. This sharp decline was driven by investor fears of a global recession and escalating trade tensions, particularly after China announced retaliatory tariffs on U.S. goods.
The market capitalization of BSE-listed companies eroded by approximately ₹16 lakh crore within minutes, and the India VIX, a measure of market volatility, surged by over 56%, reflecting heightened investor anxiety. Sectors heavily reliant on exports, such as pharmaceuticals, textiles, and IT services, bore the brunt of the sell-off, while defensive sectors like FMCG and utilities provided some cushion.
Despite the initial shock, markets began to stabilize in the following weeks, aided by foreign institutional investor inflows and optimism surrounding potential U.S. - India trade negotiations.
Portfolio Strategy: What Should You Do?
Trump's new tariffs may have shaken the markets, but some Indian companies are actually benefiting. Electronics makers in India are growing fast, thanks to global supply chain changes and India’s support through the PLI scheme.
Big tech companies like Apple and HP are now moving more of their manufacturing to India. Apple may even make all iPhones in India, replacing China. This boost in local production has caught the attention of investors, which is why the stock market showed some positive signs.
In this trade deal predicament, here’s how you can protect your investments and make smart decisions:
- Diversify Across Sectors and Investment Types: Shift investments towards sectors less affected by tariffs, such as fast-moving consumer goods (FMCG), utilities, and domestic-focused industries, to mitigate risks associated with export-dependent sectors. Also, instead of direct stock investment, consider safer options. For example, investing in Nifty Next 50 companies via an index fund or ETF can be comparatively lower risk than investing in individual stocks.
- Maintain Liquidity: Keep a portion of your portfolio in cash or liquid assets to capitalize on market corrections and new investment opportunities that may arise from ongoing trade negotiations and market adjustments.
- Monitor Trade Developments: Stay informed about U.S.-India trade talks, as progress or setbacks can significantly impact market dynamics and inform timely investment decisions.
- Rebalance Regularly: Given the heightened market volatility, periodically reassess and adjust your portfolio to align with changing market conditions and to ensure it reflects your risk tolerance and investment goals.
Using these strategies can help you handle the confusion caused by the new tariff rules and find good chances to grow your money, even when markets are changing around the world.
Conclusion
Trump’s tariffs shook Indian markets, but the storm is on a pause. While some sectors remain under pressure, India’s economy is adapting. For investors, staying calm, diversifying, and watching policy developments are key. The worst may be over, but staying alert is still wise to mitigate the risk of investing during uncertain times.
Disclaimer: No Business Standard Journalist was involved in creation of this content