Gift Nifty slid as Trump imposed a punitive tariff on India
·
But Nifty may not fall heavily for the time being
on hopes of an early Ukraine war ceasefire; both India and the US are trying
hard to persuade Putin
·
Noble Peace Prize aspirant Trump may also meet
Putin by next week to sign the ‘historical’ Ukraine ceasefire deal in the remote
presence of Zelenskyy and EU leaders
·
Trump’s 50% tariffs on India are an effective
embargo to export in the US; ALTHOUGH Trump may withdraw it before August 27,
India-US relations will get a permanent scar
·
If there is no BTA between India and the US, Nifty
may fall towards 22000 levels by September-October’25 due to stagflation
concern
On July 30, U.S. President Trump imposed a 25%tariff on Indian goods, effective August 7, 2025, followed by an additional 25%
"penalty" tariff, announced on August 6, to be effective from August
27, 2025, due to India’s continued purchase of Russian oil and military
equipment. This brings the total tariff on Indian exports to the U.S. to 50%,
among the highest rates imposed by the U.S. on any trading partner; it’s not
only an effective embargo on Indian goods, but also making a permanent scar on
India-US geo-political relationship, even if Trump relents later for any temporary
Ukraine war ceasefire by Putin within next few days.
Trump justified these measures, citing India’s
high tariffs on U.S. goods, described as “among the highest in the world,” and
its role as a major trader of Russian energy, which he claims fuels Russia’s
war in Ukraine. The U.S. views these purchases as undermining sanctions against
Moscow. India’s Ministry of External Affairs called the tariffs “unfair,
unjustified, and unreasonable,” arguing that its oil imports are driven by
market factors and the need to ensure energy security for its 1.4 billion
people.
India also noted that the U.S. initially
encouraged such imports to stabilize global energy markets after Russia’s 2022
invasion of Ukraine. The tariffs are expected to impact $64 billion of India’s
exports, potentially reducing U.S.-bound merchandise exports by 40-50%,
particularly affecting sectors like textiles, marine products, and leather.
India has vowed to take measures to protect its national interests, while
negotiations for a U.S.-India trade deal remain stalled, particularly over
agricultural market access.
On August 6, 2025, President Donald J. Trump
signed an Executive Order (EO) imposing a 25% tariff on imports from India,
effective August 27, 2025, due to India’s continued purchase of Russian oil,
which is seen as undermining U.S. efforts to counter Russia’s actions in
Ukraine. This tariff is in addition to any existing duties and a separate 25%
tariff imposed under Executive Order 14257, though it does not apply to certain
articles listed in that order.
The
Secretary of Commerce, along with other senior officials, will assess whether
other countries are importing Russian oil and recommend further actions. The fact sheet highlights that India’s oil purchases
and subsequent resale at a profit support Russia’s economy, enabling its
aggression. President Trump emphasized that these tariffs aim to deter
countries from funding Russia’s actions and reiterated his commitment to
pursuing peace, stating that Russia could avoid such measures by ending the
conflict. He also noted India’s high tariffs on U.S. goods and its profiteering
from Russian oil as reasons for the tariff increase.
On August
6, 2025, the White House issued an official statement/fact sheet to justify Trump’s decision to impose 25%
additional tariffs on India for refusing to stop continuous oil & military
equipment from Russia. Trump also vows to punish other countries involving in
direct/indirect trading of Russian ‘dirty’ oil; i.e. Trump may also impose
Russian oil punishment tariffs on china, Turkey and also EU, which is the
ultimate major buyer of dirty Russian oil, whitewashed (refined) through
Indian, Chinese and also Turkish refineries, thanks to the specific Russain oil
sanction model designed by the Biden admin and NATO/G7/EU itself.
Full Text
of the WH Fact Sheet: Bold Mine
“ADDRESSING
A NATIONAL EMERGENCY:
Today, President Donald J. Trump signed an
Executive Order imposing tariffs on India in response to its continued purchase
of Russian Federation oil, and
establishing a process for the potential imposition of similar tariffs on other
countries that directly or indirectly import oil from the Russian Federation.
The President found that India is currently
importing Russian Federation oil. Accordingly, to address the national
emergency stemming from the Government of the Russian Federation’s actions
taken against Ukraine, he is imposing an additional 25% tariff on imports from
India, effective August 27, due to India’s direct or indirect importation of
Russian Federation oil.
This
tariff is in addition to any other duties, fees, taxes, exactions, and charges
applicable to such imports, unless subject to existing or future actions under
section 232 of the Trade Expansion Act of 1962.
This tariff is also in addition to any tariff
applicable under Executive Order 14257 of April 2, 2025, as amended, but the additional 25% tariff imposed by
this order shall not apply to articles outlined in Annex II to Executive Order
14257.
The
Secretary of Commerce, in coordination with the Secretary of State, Secretary
of the Treasury, and other senior officials, will determine whether other
countries directly or indirectly import Russian Federation oil and recommend
further actions to the President as needed.
COUNTERING
THE RUSSIAN FEDERATION’S THREAT TO U.S. NATIONAL SECURITY AND FOREIGN POLICY: The Russian Federation’s actions in Ukraine pose
an ongoing threat to U.S. national security and foreign policy, necessitating
stronger measures to address the national emergency.
India’s importation of Russian Federation oil
undermines U.S. efforts to counter Russia’s harmful activities.
India’s subsequent reselling of this oil on the
open market, often at significant profit, further enables the Russian
Federation’s economy to fund its aggression.
By imposing a 25% tariff, President Trump aims to
deter countries from supporting the Russian Federation’s economy through oil
imports and impose serious economic consequences on the Russian Federation for
its ongoing aggression.
PUTTING AMERICA FIRST: President Trump has been
consistent that he will not tolerate Russian Federation aggression.
President
Trump has been transparent that the Russian Federation would not be facing
these actions if they were to “get a deal where people stop getting killed.”
President Trump has also been upfront that India
would face tariffs for buying Russian Federation oil: “India is not only buying
massive amounts of Russian Oil, they are then, for much of the Oil purchased,
selling it on the Open Market for big profits …. Because of this, I will be
substantially raising the Tariff paid by India to the USA.”
President Trump remains committed to pursuing
peace, and these actions aim to pressure the Russian Federation toward a
resolution that ends the conflict and saves lives.”
In
response to Trump’s 25% additional tariffs on India, the Indian MEA also issued an official statement on August 6,
2025, terming Trump’s action as unfortunate, unfair, unreasonable, and unjustified,
and vowed to take necessary countermeasures to protect its national interest.
India also categorically denied any external pressure on its energy security
and market dynamics.
“The United States has in recent days targeted
India’s oil imports from Russia.
·
We have already
made clear our position on these issues, including the fact that our imports
are based on market factors and done with the overall objective of ensuring the
energy security of 1.4 billion people of India.
·
It is therefore
extremely unfortunate that the US should choose to impose additional tariffs on
India for actions that several other countries are also taking in their
national interest.
·
We reiterate
that these actions are unfair, unjustified, and unreasonable.
·
India will take
all actions necessary to protect its national interests.”
The Ministry of External Affairs (MEA) of India stated
on August 4, 2025, defending its Russian oil purchases and signaling a
potential shift in strategy to counter U.S. tariffs and E.U. sanctions. The
statement, the most explicit since Russia’s 2022 invasion of Ukraine,
criticized the U.S. and E.U. for targeting India while themselves importing
Russian energy and other goods. It highlighted that India’s shift to Russian
oil, which rose from less than 1% to 40% of its imports by 2023, was driven by
market dynamics and energy affordability, unlike Western imports, which lack
such necessity. The MEA called the U.S. and E.U. actions equivalent to double
standards, “unjustified and unreasonable,” noting their silence on China’s
larger Russian oil purchases and their support for Israel’s actions in Gaza.
In response to U.S. President Donald Trump’s 25%
reciprocal tariffs effective August 7, 2025, and an additional 25% penalty
tariff effective August 27, 2025, for India’s Russian oil imports, the MEA
vowed to take “all necessary measures” to protect national interests. This
marks a departure from India’s earlier compliance, such as halting Iran and
Venezuela oil imports in 2017 under U.S. pressure.
The statement suggests three potential strategies:
continuing Russian oil purchases while pursuing free trade agreements (FTAs)
with the U.S. and E.U., seeking alternative trade partners like ASEAN, GCC, or
EAEU to bypass sanctions, or retaliating by suspending talks with the U.S. and
E.U. on trade, defense, and other areas, and possibly resuming oil imports from
Iran or Venezuela. These options come amid broader tensions with the U.S. over
trade, technology, counter-terrorism, and multilateralism, raising concerns
about the impact on India-U.S. ties, including the Indo-Pacific strategy and
the upcoming Quad summit hosted by India, when Trump is scheduled to visit
India to sign the earlier planned BTA with India. Now, after Trump’s tariff
tyrants on India, it may be very difficult for the Modi admin to finalize &
sign such a BTA (bilateral trade agreement) amid a huge media & political
uproar in India.
A tectonic
shift in Indian Foreign Policy and relations with the US amid Trump's tantrum
Earlier, just before Trump signed the EO for a 25%
additional tariff on India, there was a report that Indian Prime Minister (PM)
Modi is set to visit China on August 31, 2025, for the Shanghai Cooperation Organization
(SCO) Summit in Tianjin. This will be Modi’s first trip to China since the 2020
Galwan Valley clash and his first in over seven years. This visit follows a
period of strained India-U.S. relations due to President Trump’s imposition of
a 25% tariff on Indian goods effective August 7, 2025, and an additional 25%
penalty tariff effective August 27, 2025, targeting India’s purchases of
Russian oil. The move, seen as a response to India’s role as a major buyer of
Russian oil, has been criticized by India’s Ministry of External Affairs as
“unjustified and unreasonable,” prompting a tectonic shift in India’s
diplomatic strategy.
The SCO Summit, involving discussions on regional
security, trade, and counterterrorism among its 10 member states, offers a
platform for Modi to engage with Chinese President Xi Jinping and Russian
President Vladimir Putin, potentially addressing trade and border tensions.
This follows a thaw in India-China relations after Modi and Xi’s meeting at the
BRICS Summit in Kazan in October 2024. India’s response to the U.S. tariffs
includes exploring alternative trade partners, such as concluding free trade
agreements with ASEAN, GCC, or EAEU, and considering resuming oil imports from
Iran or Venezuela, despite risks of further sanctions. The visit signals a
recalibration of India’s foreign policy amid economic pressures from the U.S.,
with an estimated $64 billion in exports at risk, though the impact on India’s
$4 trillion economy is expected to be limited by ~0.5%, it may result in higher
USDINR, higher inflation, higher unemployment, subdued discretionary consumer
spending and eventually stagflation like scenario.
Noble
Peace Prize Aspirant Trump is now seeking to end the Ukraine war immediately, while Putin may also be exploring favorable
ceasefire terms & conditions under Trump 2.0. On August 6, 2025, U.S.
President Trump announced that "great progress" was made during a
meeting between his special envoy, Steve Witkoff, and Russian President
Vladimir Putin in Moscow. The talks, described as "highly productive"
by Trump on Truth Social, focused on seeking a ceasefire in the Russia-Ukraine
war, ahead of a U.S.-imposed deadline for Russia to reach a peace deal by
August 8, 2025, or face severe economic sanctions, including secondary tariffs
on countries buying Russian oil, such as India.
Trump stated he briefed European allies,
emphasizing that "everyone agrees this War must come to a close,"
with efforts continuing in the coming weeks. The Kremlin’s Yuri Ushakov called
the three-hour meeting "useful and constructive," noting discussions
on the Ukraine crisis and potential U.S.-Russia strategic cooperation; though
no concrete ceasefire agreements were reported.
On August
6, 2025, Trump Truthed: “My
Special Envoy, Steve Witkoff, just had a highly productive meeting with Russian
President Vladimir Putin. Great progress was made! Afterwards, I updated some
of our European Allies. Everyone agrees this War must come to a close, and we
will work towards that in the days and weeks to come. Thank you for your
attention to this matter!”
Despite the optimism, a White House official
indicated that secondary sanctions on Russia are still expected to be
implemented on August 8, 2025. This meeting coincided with Trump’s executive
order imposing an additional 25% tariff on Indian goods for importing Russian
oil, effective August 27, 2025, bringing the total tariff to 50%. Ukrainian
President Volodymyr Zelenskyy, after speaking with Trump and European leaders,
reiterated the need for a lasting peace and Ukraine’s commitment to defending
its independence.
On August
6, 2025, there is also a report that Nobel Peace Prize-winning Aspirant
President Trump intends to meet Russian President Putin in person as early
as next week, potentially on August 13, 2025, to discuss ending the
Russia-Ukraine war. Trump shared these plans during a call with European
leaders, also indicating a subsequent trilateral meeting with Putin and
Ukrainian President Volodymyr Zelensky. However, it remains unclear whether
Putin or Zelensky has agreed to these meetings. The announcement follows a
"highly productive" meeting on August 5, 2025, between Trump’s
special envoy, Steve Witkoff, and Putin in Moscow, which Trump described as
advancing ceasefire efforts.
Is there a
tectonic shift in Trump’s policy towards China?
Although as a sovereign country, India does not
need to explain every time Trump throws an insulting comment, the reality is
that India needs the US and the USD; otherwise. The US is now India’s biggest
source of USD ~$95B to $100B if we combine both export surplus and net inward
remittances. The US, under Trump 2.0,
now no longer needs India against China. Trump 2.0 now abandons the China
decoupling policy, unlike during Trump 1.0, and is now focusing more on
de-risking, treating China as the main competitor rather than adversary.
China is now overtaking the US not only in terms
of real wealth, development, prosperity, but also in hi-techs, AI, chips,
quantum computing, 6G, and advanced military hardware & software. China’s
indigenous GPRS and operating system have reduced it on the US. The US now sees
China as an equal, if not bigger competitor in both economic and military,
i.e., as the true 2nd superpower in the world in all aspects; not as
a mere military superpower like the old USSR (now Russia). Thus, Trump 2.0 is
now negotiating with a stronger China with a different approach (3D chess game)
than India, which has no leverage (cards) like China.
The US and China now have almost 45% of global
GDP; both are dependent on each other for prosperity and growth. China is also
the biggest export market for the US, and thus Trump 2.0 is now no longer
seeking China decoupling, but only strategic derisking. For Trump, China, its
market and supply chain are far bigger and important than ‘tiny’ India, and
thus Trump 2.0 is now less hawkish on China and harsher on India. Trump now
often praises China for opening up the economy for US goods & services,
unlike ‘Tariff King’ India, which is very reluctant or rigid to change its
century-old protectionist policies for domestic industries (including MSMEs) and
also the agri/farm/dairy sector (vote bank & note bank politics).
Trump may not sign any BTA with India, unless it
opens the economy almost fully like Japan, South Korea, Indonesia, Vietnam, and
other ASEAN countries with 0% tariff and no stringent (obnoxious) regulations.
As a ‘vibrant democracy’, India or any main political party may not be ready
yet to sacrifice both the note bank and vote bank for US interests. Trump may
not like India’s go-slow time time-consuming negotiation tactics and may also
favor Pakistan more than India because of its high potential rare earth
materials reserve for ~$6T, something which India does not have at present.
Trump’s
tariff tantrum has sent shockwaves through U.S.-India relations. This move, part of Trump’s broader reciprocal
tariff policy, marks a significant departure from over 15 years of U.S. efforts
to court India as a strategic counterweight to China’s ‘growing aggression’. Trump’s
tariffs and penalties are not just about trade deficits; they’re a calculated
move to pressure India into reducing ties with Russia and aligning more closely
with U.S. interests. India’s 35–40% reliance on Russian oil (up from 3% in
2021) and its status as a major buyer of Russian military equipment have become
flashpoints. Trump’s rhetoric, including threats of 100% tariffs on countries
importing Russian oil unless Russia agrees to a Ukraine ceasefire by early
August 2025, escalates tensions.
Trump’s
Pakistan Play: All for the vast reserve of rare earth materials?
Adding complexity, Trump’s overtures to
Pakistan—imposing a lower 19% tariff and praising its role in a May 2025
ceasefire—have unsettled India. His suggestion that Pakistan could “sell oil to
India someday” and a potential Pakistan stopover during a planned India trip
has revived fears of U.S.-India-Pakistan “hyphenation,” a dynamic India has
worked to avoid for over a decade. This could be a deliberate tactic to
pressure India into trade concessions.
BRICS and
Non-Alignment: Trump’s
criticism of India’s role in BRICS and its delay of currency arrangements
within the bloc suggests a U.S. push to weaken India’s ties with Russia and
China. However, India’s non-aligned foreign policy, balancing Western and
regional partnerships, may resist this pressure. Indian policymakers are wary
of over-aligning with the U.S. at the expense of BRICS or the Shanghai
Cooperation Organization (SCO).
However,
Trump’s frustration with Apple’s Indian investments—producing 1 in 4 iPhones by 2027—underscores his
“America First” push to bring manufacturing back to the U.S., creating only
20,000 jobs domestically compared to 600,000 in India. This tension highlights
his broader goal of reshaping global supply chains. Trump’s unpredictable and
bellicose tariff, trade, and tech policies are a big headache for various US
MNCs including Apple, which has to keep shifting production facilities in line
with Trump’s morning mood and his whims & fancies. Trump wants iPhones and
other products to be completely in the US despite knowing fully well that the cost
will be much higher and also has to import basic raw materials from the same
China or any other Asian exporter.
Conclusion:
India-US BTA still possible?
Trump’s 25% tariffs and 25% penalties are not a
bluff but a high-stakes negotiation tactic. India, with its economic resilience
and strategic importance, is well-positioned to secure a favorable deal,
potentially lowering tariffs to 15–20%. The challenge lies in balancing
concessions with national interests, protecting agriculture, and maintaining
ties with Russia and BRICS. While the tariffs pose short-term challenges, they
also offer India an opportunity to strengthen its global trade position and
domestic consumption, provided it plays its cards wisely. As Trump’s
transactional diplomacy unfolds, India must decide whether to push back, pivot,
or partner. What’s clear is that this is business, Trump style—and India’s
response will shape its economic and geopolitical future.
The 25% U.S. tariff and potential penalties pose
short-term challenges for India’s economy, with a projected GDP growth
reduction of ~0.5%, rupee depreciation of ~5%, and inflationary pressures (+100
bps) from higher input costs. Employment in labor-intensive sectors like textiles
and auto components is at risk, with MSMEs facing significant disruption. The
potential higher inflation, higher unemployment, and lower economic growth may
bring a stagflation-like scenario for the Indian economy.
Looking ahead, all focus may now be on Trump’s
attitude, India’s domestic political climate, and the ongoing media trial,
which may affect the progress of BTA talks between India and the US. If there
is no BTA between the US and India with lower tariffs (15-20%) by December
2025, the Indian economy may face serious challenges in 2026 with higher
USDINR, higher imported inflation, a weak labor market, subdued consumer
spending, and lower economic growth.
Although as an export and financials-heavy index,
Nifty earnings may not be affected too much, potentially higher USDINR may not
be good for the overall economy and Dalal Street. Also, prolonged Trump tariff
tantrums will be negative for export-savvy Indian corporates. India is also
vulnerable to US tech dependency and any potential direct/indirect sanctions.
Bottom
line:
Overall
impact of Trump’s 25% additional tariff on the Indian stock market may be
limited as Putin may soon agree to the Ukraine war. Both Indian (NSA-Doval) and US envoy are trying
hard to persuade Putin to agree to at least a 30-day temporary ceasefire or
temporary halt to Aerial warfare.
At
projected 1000 EPS for FY26 and 22 fair PE, the fair value of Nifty may be
around 22000; Nifty may slip to ~22000 by
September-December’25, if there is no meaningful progress on US-India BTA
and an escalation in Trump tantrum, leading to deteriorating diplomatic
relation with the US and subsequent direct/indirect impact on India’s USD
inflow (subdued export, remittances, FDIs, FPIs etc).
Technical outlook: Nifty Future, Bank Nifty Future, and
USDINR
Looking
ahead, whatever may be the narrative, technically Nifty
Future (CMP: 24700) now has to sustain over 24600-24500 for a recovery to
25000/25300*25800/26000* and a further rally to 26100/26300-26400/26500;
otherwise, sustaining below 24440, Nifty Future may fall to 24300/24000 and
23600/23350*-23900/23750 and 23400*/23100-22600/22200 and further 22000-21700*
the coming days.
Technically,
Bank Nifty Future (56000) now has to sustain over 55600 for a recovery to 57000/57900 and only after
sustaining 58100, may further rally to 58500/58900-60500/61000 and a further
61500-65750 in the coming days; otherwise, sustaining below 55500-400, BNF may
further fall towards 55000-54900 and 54500/54000-53500/53000 and
52500*-52000/51500 and further 51000/50500-50000/49700 and 49200-47700 in the
coming days.
Technically,
USDINR-I now (87.75) has to sustain over
88.00 for a further rally to 88.50/88.75-89.00/89.50 and
90.00/90.50-91.00/91.50 and 92.50-94.50 in the coming days; otherwise, sustaining
below 87.50-87.00, USDINR may again fall to 86.50/86.00-85.50/;85.00 and
84.00-83.50 in the coming days.
Disclaimer: I
am an NSE-certified Level-2 market professional (Financial Analyst- Fundamental
+ Technical) and not a SEBI/SEC-registered investment advisor. The article is
purely educational and not a proxy for any trading/investment
signal/advice. I am a professional
analyst, signal provider, and content writer with over ten years of experience.
All views expressed in the blog are strictly personal and may not align with
any organization with, I may be associated.
If you want to support independent &
professional market analytics, you may contribute to my PayPal A/C: asisjpg@gmail.com
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