Trade War Thaw: US Slashes India Tariffs to 18%, Markets Surge Record 3,600 Points

Market snapshot: A seismic shift in US-India trade relations triggered a historic rally on Dalal Street today. The Nifty 50 soared over 1,200 points and the Sensex surged 3,600 points after President Trump announced a reduction in reciprocal tariffs on Indian goods from 25% to 18%, effective immediately.

Summary: President Trump and PM Modi seal a historic trade deal. US lowers reciprocal tariffs on Indian goods to 18% (down from 25%). In exchange, India agrees to eliminate barriers on US goods and shift energy purchases away from Russia. Indian markets and the Rupee have rallied sharply.

Key Takeaways

• Tariff Relief: US reciprocal tariff on Indian exports cut to 18% from 25%; punitive 25% oil-related tariff scrapped.
• Quid Pro Quo: India to reduce tariffs on US goods to zero and commit to $500B+ in US purchases (Energy, Tech, Defense).
• Sectoral Boom: Gems & Jewellery (Titan, Kalyan), Textiles, and IT stocks rallied 5-20% on improved export viability.

SAHI Perspective

While the headline 18% tariff is a relief compared to the looming 50-75% threat, the structural cost is high. India's commitment to 'Zero Tariff' on US imports and a $500B purchase order effectively pivots India's strategic autonomy. Short-term, this is a massive liquidity trigger for export-oriented sectors (Pharma, IT, Textiles). Long-term, domestic manufacturing (SMEs) faces fierce competition from duty-free US goods.

Closing Insight

This deal replaces uncertainty with a defined, albeit expensive, framework. The immediate beneficiary is the Indian exporter; the long-term payer may be the domestic consumer if energy costs rise. Volatility will remain high as details of the 'Zero Tariff' implementation emerge.

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