On 7th April 2025, the Indian stock market observed a huge slump. This unprecedented stock market crash in India could be an aftermath of the tariff war started by US President Donald Trump. On Monday, the NSE Sensex Index plunged 3939 points, while the Nifty breached below the 21,800 marks.
The overall stock market index has dropped to 1160 points intraday, registering the worst fall in the stock market index since June last year. While the market goes up and down depending on multiple factors, the US tariff war has been noted as one of the prominent reasons behind today’s market slump.
In the following section, let us quickly analyze some of the key reasons why the stock market in India has fallen.
1. USA Imposes Tariff on Imports
After taking oath as the President of the USA, Donald Trump has taken many controversial decisions. While some decisions cheered up people in the country, other decisions have been criticized. Imposing the tariffs on imported goods is one such decision, which magnetized many criticisms.
However, there are reasons why President Trump has imposed such tariffs. The motto is to give a boost to the local production in the USA. Imposing tariffs on the goods imported from China and India will eventually encourage the US manufacturers to partner with local providers for importing goods.
In the short term, it may cause market disruptions, leading to a major tariff war. However, in the long run, the economy of the country may flourish. In the last 4-5 years, China has become a major player in importing various goods and raw materials to US manufacturers. China’s global influence on exporting goods and raw materials is a major threat to the economy of the USA. Moreover, it is also a threat to dominating the global geo-political landscape.
For all these reasons, the USA has decided to impose tariffs on various goods to boost local production. For example, the auto tariff imposed by Trump can disrupt the automobile manufacturing industry in the USA. It can increase the cost of production, leading to a big jump in regular and commercial automobile prices.
For India and China, this is an alarming sign since these countries are big exporters to the USA. Therefore, Trump’s tariff will surely have a significant impact on the export from India.
2. China Retaliates
While India is observing the situation closely, China retaliated to the decision to impose tariffs on the imports. Recently Beijing has announced a 34% import duty on the goods that have been imported to China from the USA. China has not stopped imposing tariffs on the USA. It has also imposed the same tariff on the Indian goods that are exported to China.
3. Global Disruptions
Trump’s tariff has created a global disruption since many local producers relying on US exports are now under tremendous pressure. Either they need to reduce the material cost, or they have to find other buyers. This uncertainty is reflected in the stock markets in various countries, including India.
So, these are some of the reasons why the stock market is down in India on Monday. Understanding the global situation and market sentiments, it can be said that the impact of Monday’s slump on the stock market will last for the whole week. Since Trump will bring many such policies further, it will be difficult for the stock market to revive in the near future. However, it is still a good time to invest in the market, especially prices of many well-known stocks have fallen. Therefore, investors can take advantage of the situation to invest in the market and gain profit in the long run.
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