The stock market took a major hit on Tuesday, with the Sensex dropping by 1,038 points (1.25%) and the Nifty falling by over 327 points (1.3%) after U.S. President Donald Trump declared a 25% tariff on steel and aluminum imports. These tariffs will apply to all steel and aluminum imports, including from Canada and Brazil, and will come into effect on March 4. The announcement coincided with the upcoming visit of Indian Prime Minister Narendra Modi to the U.S.
Trump’s tariff hike, a key part of his election promise, aims to curb what he claims are attempts by countries like China and Russia to bypass existing duties. He argues that this policy will stimulate domestic production and job creation in the U.S.
Though India is not a major steel exporter to the U.S., it is one of the largest producers of aluminum, and this tariff could negatively impact aluminum exports. Companies such as Vedanta and Hindalco, major players in the aluminum sector, may have to find alternative markets, which could take time to establish.
The tariffs have caused concern globally, with Canadian steelmakers warning of significant disruption and the European Commission pledging to protect its businesses, workers, and consumers. Additionally, Trump has singled out India, labeling it a “very big abuser” of trade and calling its tariffs “enormously high.” This follows previous remarks where Trump accused countries like India, Brazil, and China of causing harm to the U.S.
In response to the tariffs, India reduced custom duties on American products, including high-end motorcycles, cars, and smartphone components, benefiting U.S. companies like Harley-Davidson, Tesla, and Apple. However, Finance Minister Nirmala Sitharaman clarified that these cuts were not in response to Trump’s tariffs but aimed at strengthening India’s economy.
During Trump’s first term, similar tariffs were imposed, leading to short-term manufacturing gains but long-term setbacks, as U.S. industrial production fell after the introduction of these tariffs in 2018. In his second term, Trump has shown more willingness to impose tariffs, also targeting China, Mexico, and Colombia for various geopolitical reasons.
Trump’s tariff policies continue to have a significant global economic impact, stirring market reactions and geopolitical tensions.
