US Tariffs Impact Indian Stock Markets as Modi Visits Washington

The US government's announcement of tariffs targeting countries that impose duties on American goods has led to a significant downturn in the Indian stock markets. Over the course of just two days, the market value plummeted, erasing more than $180 billion. This dramatic fall affected nearly 87% of the stocks listed on the National Stock Exchange, showcasing the wide-reaching impact of the US policy shift.

In response to the tariffs announced by US President Donald Trump, the Indian government, under Prime Minister Narendra Modi, reviewed its trade policies. In an attempt to mitigate the situation, India reduced customs duties on a variety of products. This move came as Prime Minister Modi planned a visit to the United States, with meetings scheduled in Washington on February 12 and 13. The visit aims to discuss and possibly alleviate the growing trade tensions between the two nations.

The initial round of tariffs from the Trump administration targeted major trading partners, including China, Mexico, and Canada. This approach reflects the administration's broader trade strategy, which impacts global markets and bilateral trade relationships. The effects have been particularly pronounced in India, where the stock market experienced a sharp decline following the announcement.

The trade imbalance between the US and India further complicates the situation. In 2024, the United States imported $45.7 billion more in goods from India than it exported to the country. Indian exports to the US comprised approximately 2.7% of all American imports last year. The primary products imported from India include pearls, semi-precious stones, pharmaceuticals, nuclear reactors and machinery, mineral fuels and oils, and electrical equipment. This diverse range of goods underscores the complexity of the trade relationship and the challenges in addressing the deficit.

Despite the economic strains, Prime Minister Narendra Modi's visit to the USA represents an opportunity for dialogue and negotiation. The discussions are crucial for both countries as they seek to balance protectionist policies with the need for robust trade relations. The outcome of these talks could influence future trade policies and potentially stabilize the markets affected by the initial tariff announcements.

As the situation unfolds, the international community watches closely to see how these trade policies will shape the economic landscape. The repercussions of the tariffs have already been felt in India's stock markets, and the ongoing discussions between Prime Minister Modi and US officials will be pivotal in determining the next steps for both nations in navigating their complex trade relationship.