Sweeping Tariffs Gone, But Trump’s 10% Global Tariffs Are Here: What to Expect from Markets on Monday?
Market Outlook Following Tariff Changes
Trading on Monday is set to be electric as the markets react to the U.S. Supreme Court’s decision to invalidate Donald Trump’s extensive tariffs. A positive indication comes from the GIFT Nifty, which concluded at 25,886, reflecting a gain of 320 points or 1.25%.
The Impact of Trump’s 10% Global Tariffs
Despite the negation of the sweeping tariffs, the new 10% global tariffs imposed by Trump on imports from all nations could cloud the immediate market outlook. A statement on Truth Social claimed, “It is my Great Honor to have just signed a Global 10% Tariff on all Countries, effective almost immediately.”
Key Sectors to Watch
Investors should particularly monitor export-oriented sectors, including:
– Gems and jewellery
– Textiles
– Marine products
– Pharmaceuticals
– Automobile industry
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, emphasized that this ruling represents a significant sentiment booster for Indian markets, while simultaneously posing a challenge to the Trump administration, which has previously introduced uncertainty in global trade.
Potential Risks Ahead
Bathini cautioned investors to remain vigilant regarding subsequent actions from the Trump administration as it may pursue face-saving measures, given that tariffs are subject to congressional review. Importantly, the emergency measures used to impose these tariffs do not apply to trade, meaning any follow-up decisions will face scrutiny.
Effects on the Indian Market
The Supreme Court’s ruling means India could benefit greatly. Analysts predict that removing reciprocal tariffs could liberate roughly 55% of India’s exports to the U.S. from an 18% duty, leaving them subject only to the standard Most Favored Nation (MFN) tariffs. However, Section 232 tariffs of 50% on steel and aluminum, as well as 25% on auto components, will persist.
Investor Sentiment and Future Trajectories
Investment veteran Gurmeet Chadha celebrated the Supreme Court’s decision, recognizing it as good news particularly for under-represented markets like India. He stated that with mid-term elections looming, and Trump facing low approval ratings, the administration may prioritize stimulating the economy and curbing inflation, thereby reducing global uncertainty.
Moreover, sectors such as IT, pharma, metals, textiles, and energy may particularly benefit from decreased tariff uncertainties. As Sudeep Shah from SBI Securities pointed out, the consistency of the 10% import duty under Section 122 of the Trade Act of 1974 would be advantageous for export-driven businesses, allowing them to navigate trade arrangements with greater ease.
Conclusion
The market responses following the Supreme Court’s ruling indicate a potential for growth, particularly within exports and sectors impacted by tariffs. However, the implications of Trump’s newly imposed 10% global tariffs need careful monitoring as the situation evolves. Investors should remain informed as they navigate the impending market dynamics, especially as discussions on refunds for tariffs collected during the past year come into play.