After the announcement of 10 percent global tariff on Friday, the US President has increased it to 15 percent. After which a new uncertainty has arisen among stock market investors. The special thing is that this announcement has been taken after the decision of the US Supreme Court, when the court had declared Trump’s reciprocal tariff invalid. Now the biggest question is how will the Indian stock market react after the 15 percent global tariff.
There is a reason for this also. After 10 percent global tariff, the total tariff on India was expected to be between 13 to 15 percent, which may increase to 18 to 20 percent. In such a situation, a decline may also be seen in the stock market. There is a reason for that too. There is a suspicion among investors that the US President may also announce further increase in tariffs before the Indian stock market opens on Monday. Let us try to understand how the stock market can react after Trump’s decision on Monday.
Supreme Court and Trump’s changing decisions
On Friday, the Supreme Court ruled that Trump had violated his powers under an economic emergency law by imposing massive tariffs. The markets initially welcomed this decision. After the decision, there was a sharp rise in GIFT Nifty, which brought relief that a major impact on global trade has been removed. However, within hours, Trump announced a 10 percent tariff on all under a different legal rule. On Saturday, he said the temporary levy would be further increased to 15 percent — the maximum allowed under Section 122 of the US trade law.
The rule allows tariffs of up to 15 percent to be imposed for 150 days, after which they require congressional approval to continue. Trump also indicated that during this 150-day period, the administration would look at other legally permitted avenues to impose tariffs, including laws allowing import duties on national security or unfair trade practice grounds. For the market, the issue is less about the percentage of global tariffs and more about unpredictability.
What could be the impact on the market?
Nilesh Shah, MD, Kotak Mahindra AMC, said in an ET report that the Street is already pricing on continuity. Stock markets expect the US to use different rules of law to keep tariffs virtually unchanged. Any change will be short-term and hence, unlikely to have any significant impact on the market direction. This suggests that investors may overlook a headline jump of 10 per cent to 15 per cent, especially if they believe the total tariff burden will not change much over time.
However, short-term effects may be seen. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said in the media report that apart from the headline rates, there are also financial implications. He said it was important to keep an eye on the uncertainty surrounding the approximately $175 billion collected under tariffs last year and the potential impact of refund claims. Despite this, the situation is still unstable. Any new statements or alternative tariff actions under different presidential authorities could soon bring volatility again.
In which sectors there can be movement?
For India, this timing is important. Indian equities are already under pressure due to uncertainty over US Federal Reserve policy and weakness in IT stocks. Earlier this month, India and the US signed an interim trade understanding that reduced reciprocal tariffs on Indian goods to 18%, while India agreed to reduce certain tariff and non-tariff barriers on US imports.
The earlier agreement had eased concerns and supported sentiment in export-linked sectors. Now, with the big announcement of 15 per cent tariffs on almost all imports into the US, investors will want clarity on how the new structure interacts with the bilateral understanding. If traders fear margin pressure or demand slowdown, export-oriented sectors like IT, pharmaceuticals, textiles and auto components may see a sudden reaction. However, if the market feels that the 15 per cent limit is temporary and is broadly in line with expectations, then losses may remain under control.