Vanshika verma | Aug 25, 2025 |
Shocking! US Strikes India and Brazil Amid Rising Global Tensions
US President Donald Trump made the decision to double tariffs on Indian exports from 25% to 50%, effective from August 7; this has introduced a complex challenge for India’s economy.
Trump posted on his social media, “While India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country.”
Not only India, but he also announced a 50 % tariff on most Brazilian goods but excluded a few sectors such as aircraft, energy, and orange juice.
Ministry of Commerce and Industry data stated that India’s exports to the US are concentrated in Labour- and skill-intensive sectors such as electronics, textiles, gems and Jewellery, steel, IT services and refined petroleum.
In FY24, India exported over:
The steel sector now faces pricing drawbacks in a sensitive global market, while IT services may experience regulatory investigation and reduced demand for contracts.
However, any addition of trade to refined petroleum or energy-related trade forms a major pillar in India’s strategic connections with Russia and China.
India’s electronic industry, such as Apple, Samsung and Motorola suppliers, gets a two-week relief from the suggested 50% tariffs launched by the US. Tariffs on electronic products remain under review amid ongoing collective negotiations as per Section 232. However, earlier, Section 232 had permitted smartphones, laptops, and semiconductors to remain exempt from the 10% baseline tariff levied in April.
The Reserve Bank of India (RBI) held the policy rates steady, keeping the India-us yield spread at approx. 220 bps. This could encourage foreign portfolio inflows.
The Sensex and Nifty are expected to see resumed irregularity. oil and gas, autos, textiles, chemicals, electronics, steel, and IT may face lower earnings forecasts on large export sectors.
However, not just India but also Beijing’s pushback on US coercion regarding Russian oil tariffs signals a broader geopolitical resistance. India’s energy ties with Russia.
Prime Minister Narendra Modi planned to visit China soon at the end of August. The Chinese Premier has expressed Indo-China ties as a ‘dragon-elephant tango’, Signalling a thaw.
The implications and depth of Trump’s 50% tariff are not clear because the details are not yet known to India. Market experts and policymakers will be closely watching the following developments to measure the bottom of the impact.
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