Opening Bell - 03 / 04 / 25

Opening Bell - Morning Commentary

Global stock markets plunge after Trump announces harsher-than-expected tariffs

President Donald Trump laid out the U.S. “reciprocal tariff” rates that more than 180 countries and territories, including European Union members, will face under his sweeping new trade policy.

Trump, who referred to April 2 as "Liberation Day", made the announcement from the Rose Garden of the White House in an event attended by steel and auto workers.

A minimum 10% tariff on all exporters to the U.S. and slap additional duties on around 60 nations with the largest trade imbalances with the U.S. That includes substantially higher rates on some of the country’s biggest trading partners, such as China — which now faces a tariff of at least 54% on many goods — the E*uropean Union and Vietnam*. However, Canada and Mexico have been spared from additional tariffs. India, facing 26% tariffs, has been subject to what Trump describes as 'discounted' reciprocal taxes.

The fine print of President Trump's executive order indicates that reciprocal tariffs won't apply to autos, semiconductors, steel, aluminium, copper and other products already targeted or potentially still to be targeted by sectoral tariffs.

The prospect of a radical escalation in the global trade war in coming days has nearly doubled the probability of a recession in the U.S. economy in the next twelve months.

U.S. stock futures cratered as President Donald Trump unveiled sweeping tariffs, raising the risks of a global trade war that hits the already sputtering U.S. economy.

Reciprocal Tariffs - Blessing in disguise for some

Trump's tariffs do not impact local businesses in general but the sectors with high exposure to the US markets. For example, India exported textiles and apparels worth $9.6 billion to the US, about 28% of all exports in the category, in FY24. However, the latest round of tariffs may help Indian exports get more competitive compared to China and Vietnam, which had a market share of 21% and 19% respectively, compared to India's 6%. The reciprocal tariffs on China have increased the duties by 34% for China, 46% for Vietnam and by 37% for Bangladesh.

Pharma sector seems to have been excluded from tariffs announced by Trump administration. Key stocks with higher revenue mix from the US are Aurobindo (48%), Zydus (47%) and Dr Reddys (46%).

A 26% tariff could have a potential impact of $30 billion on India's gross domestic product (GDP), That would amount to about 0.7% of the $4.3 trillion GDP India's likely to have by the end of the calendar year 2025, as per the International Monetary Fund (IMF).

Markets to plunge at open – BFSI & Pharmaceuticals will be in demand

Gloabl stock markets plunged and haven assets rallied as investors rushed for safety after US President Donald Trump unveiled reciprocal tariffs that were more aggressive than expected, sparking concerns over inflation and growth.

Indian stock market will react negatively to protectionist US policies, as they increase global risk aversion. FPIs could reduce exposure to emerging markets, leading to volatility.

Nifty is likely to open gap-down and 23100 – 22917 zone could offer support to the markets. After opening sharply lower, short covering and buying support are expected to emerge at lower levels as the event related uncertainties are behind us. Domestically-focused sectors and those exempted from tariffs, particularly BFSI and pharmaceuticals, may provide market stability.