Morning Brief: Tariff Turmoil; Tariff Tensions; Tariff Trouble

Kick-start your morning with Swarajya’s Morning Brief – your news fix, curated for clarity and insight.

World Braces For Trump’s 'Liberation Day' Tariff Storm

Ahead of President Donald Trump’s much-anticipated "Liberation Day" tariff announcement, the world is bracing for what could be the most sweeping trade policy shift in years. While Trump has promised significant tariffs on imports, the details remain murky. What’s certain is that tariffs could impact a wide array of goods, ranging from steel to consumer electronics, with rates potentially varying by country.

Analysts have speculated on rates from 10 per cent to as high as 60 per cent, particularly for imports from China, but the White House has not confirmed specifics.

Countries around the globe are on edge, as Trump hinted that these new tariffs could apply to "all countries," potentially shaking up the global trade landscape. The White House is targeting what it calls the "Dirty 15" — nations that impose trade barriers harmful to US businesses, including major players like China, Canada, the EU, and India.

The economic fallout could be significant. While US firms will bear the brunt of the tariffs, they may pass on the costs to consumers, triggering price hikes and potentially stoking inflation. As the US economy teeters on the edge of a possible recession, the ripple effects of these tariffs could be felt worldwide.

US Criticises Make In India, Defense Offsets And Data Localisation

The US has raised objections to India’s trade policies, including the ‘Make in India’ initiative, defence offset requirements, and data localisation rules, amid the of ongoing bilateral trade negotiations between the two countries. 

1. High Import Tariffs: The US criticised India’s high import duties, particularly on agricultural products like alcoholic beverages (150 per cent) and walnuts and raisins (100%), making it difficult for US goods to compete in the Indian market.

2. ‘Make in India’ Policy: The US expressed concerns about India’s ‘Make in India’ policy, which reserves contracts for domestic suppliers, arguing that it disadvantages foreign firms and hinders fair competition.

3. Defense Offset Policy: India’s defence offset policy, which requires foreign defence contractors to invest at least 30 per cent locally, was seen as burdensome for US exporters, though India defends it as necessary for technology transfer and defence self-reliance.

4. Data Localisation Requirements: The US attacked India’s data localisation rules, which require payment service providers to store data domestically, viewing them as restrictive. India, however, argues they are necessary for national security and data sovereignty.

5. Intellectual Property Concerns: The US continued to discredit India’s patent laws, especially Section 3(d) of the Patents Act, which prevents "evergreening" of pharmaceutical patents, arguing it hampers innovation, while India defends it as essential for ensuring affordable medicines.

India's Exports To US Could Lose $3.1 Billion Due To New Tariffs

India's exports to the US could face a net impact of $3.1 billion due to reciprocal tariffs imposed by US President Donald Trump, according to a CareEdge Ratings report. This equates to 0.1 percent of India's GDP, but the broader impact may be more significant due to sentiment risks. The report assumes an 8 percent additional tariff on Indian goods and a 4 percent depreciation of the rupee, which together could cause a $4 billion loss when adjusted for currency fluctuations.

However, when considering price elasticity and uniform additional tariffs across all export categories, the direct loss is estimated at $3.1 billion. The US is India's largest export market, and these tariffs, combined with previous US tariff measures targeting steel, automobiles, and other sectors, could have serious implications for India’s trade balance.

Government Preparing For 4-5 Possible US Tariff Scenarios

The Indian government is preparing for US reciprocal tariffs by working on four to five possible scenarios regarding their impact on Indian exports, but it is unlikely to take immediate countermeasures as it continues to negotiate a bilateral trade deal, a report in the Times of India says. The scenarios include sector-specific tariffs, country-specific levies, or even product-specific actions targeting specific industries like agriculture or electronics.

Additionally, the government is factoring in the potential for secondary tariffs on countries like those buying oil from Venezuela, as well as retaliatory measures similar to the U.S. response to Canada’s automobile tariffs.

Indian Refiners Boost US Crude Imports

Indian refiners increased US crude imports by two-thirds to 244,000 barrels per day (bpd) in March from 146,000 bpd in February, while Russian imports grew 11 per cent to 1.66 million bpd despite US sanctions, amid Trump’s push for American energy exports and tariff threats on Russian oil.

Sanctions failed to stop Russian oil as traders bypassed restrictions, offloading inventories to offer India cost-effective options. Iraq and Saudi Arabia saw their supply to India drop 16-17 per cent in March as refiners turned to cheaper US and Nigerian crude, with Nigeria’s imports rising to 207,000 bpd from 74,000 bpd.

Industry leaders believe Trump won’t heavily disrupt Russian oil, avoiding US pump price hikes, as sweet crude gains favour over Middle Eastern sour grades.

Worst Market Start To A Financial Year In Five Years

India’s equity indices had their worst financial year opening in five years, with the NSE Nifty falling 1.5 per cent and the BSE Sensex dropping 1.8 per cent on Tuesday (1 April). Investor uncertainty over US President Donald Trump’s global tariff plan and a lack of foreign buying triggered the sell-off, as FPIs offloaded Rs 5,902 crore worth of stocks.

Sectors like IT, pharma, and automobiles faced pressure, with Nifty’s realty, information technology, consumer durables, and financial services indices losing 2-3 per cent. Domestic institutions bought Rs 4,323 crore worth of stocks, but analysts warned markets may not have bottomed out yet. While global markets rebounded after Monday’s losses, Indian stocks struggled under tariff concerns.

Gold Hits An All-Time High Of Rs 90,000

Gold surged to a record Rs 90,000 per 10 gm on Tuesday due to global economic uncertainties and geopolitical tensions, but soaring prices have led to a sharp drop in consumer demand. Buyers are opting for lower-weight jewellery, forcing smaller manufacturers to offer discounts and struggle with losses.

Retailers are facing financial stress, with many defaulting on payments as sales during Gudi Padwa fell 40 per cent from last year. The industry is shifting towards 18K gold and price-matching strategies to sustain demand. Bullion has risen 18 per cent this year, with the next international resistance level at $3,210 ( Rs 92,000).

Trump-Xi Summit Odds Slip Away

The Trump administration’s aggressive tactics, including renewed tariffs and support for Taiwan, are intensifying tensions with Beijing, jeopardising prospects for a US-China summit.

Chinese Foreign Minister Wang Yi has warned that China would retaliate if the US imposed tariffs under the pretext of fentanyl smuggling, urging equal-footed consultations instead. US Defence Secretary Pete Hegseth, during his Asia tour, has pledged advanced military support to the Philippines and Japan to counter China, emphasising deterrence in disputed regions like the East and South China Seas.

Beijing has responded with large-scale military drills near Taiwan, signalling readiness for precision strikes and a potential blockade, following US moves like removing anti-independence language from the State Department’s website.

Global Giants See Massive Market Value Decline

In the first quarter of 2025, the world’s largest corporations experienced the steepest decline in market values since June 2022, hit by tariffs imposed by US President Donald Trump and growing concerns over a potential US recession.

According to data, the market value of the top 10 global companies fell by 13.2 per cent, dropping to $18.64 trillion by the end of Q1. Tesla saw its market value plunge 35.7 per cent, while Broadcom and NVIDIA experienced losses of 27.56 per cent and 19.59 per cent, respectively. The Nasdaq Composite index, which had surged 84.5 per cent over the last two years, dropped 10.42 per cent, marking its largest decline since mid-2022.

You’re all caught up—until next time.