Market crash: Is trade euphoria ignoring tariffs? : July 26, 2025

Market crash: Is trade euphoria ignoring tariffs? : July 26,

Stock market crash: The Nifty 50 index fell by about 400 points as a result of heavy selling on the Indian stock market.

Stock market crash: Last week, the Indian stock market saw significant selling due to uncertainty surrounding the factors stalling the trade agreement between the US and India. The Nifty 50 index finished below the 50-DEMA support of 24,900,having lost almost 400 points from its weekly peak.Experts have recommended that individual investors exit the excitement surrounding the India-US trade pact due to concerns about further declines in the major benchmark and broad market indexes. Even if the India-US agreement is signed,they cautioned investors to consider the reality of Trump’s tariffs.They claimed that Dalal Street may experience excitement after signing the India-US pact. But the markets will be dominated by Trump’s tariffs following the US-India agreement.

Also Read : Markets close flat: Sensex, Nifty 50 steady : July 22, 2025

“The India-US trade deal is about ensuring the interest of the two economies,” stated Avinash Gorakshkar,a fundamental market analyst registered with SEBI, warning retail investors to be wary of the euphoria surrounding the trade deal.It is important to keep an eye on what India receives for its textile, pharmaceutical, and IT sectors.We might witness a major collapse on Dalal Street if the agreement does not take into account the interests of the Indian IT,pharmaceutical,and textile sectors.

Euphoria over the India-US trade accord : 
“Despite the market euphoria, the fact remains that on December 31 last year, the average aggregate US tariff on imported goods was around 2.5%,”Avinash Gorakshkar said, highlighting the reality of Trump’s tariffs even after the India-US trade deal is signed.Therefore,it will still be at least six times what it was just a few months ago and easily the highest it has been since the 1930s, even if it falls within the predicted 15-20% range.”

Retail investors are advised to examine the comparable tariffs imposed on trading partners.”The relative tariff in comparison to our trading competitors is more important than the absolute tariff rate,” stated VK Vijayakumar,Chief Investment Strategist at Geojit Investments Limited.The United States has levied a 20% tariff on Vietnam and a 19% tax on Indonesia in recent trade agreements. Most countries are anticipated to impose tariffs above 15%.

Therefore,given the current situation, it can be deemed appropriate if India is able to negotiate a tariff rate between 15% and 20%.The Trump administration, which is focused on MAGA,cannot be expected to provide a low tariff rate that would allow underdeveloped nations to export to the US and profit from it.

“Based on current patterns, the majority of countries will continue to impose a base tariff rate of 15%. “Goods like steel and aluminum have higher rates even when the base tariff rates are lower,like for the UK,at 10%,”stated VK Vijayakumar of Geojit Investments Limited.

The truth of Trump’s tariffs :
According to a recent projection by US Treasury Secretary Scott Bessent,tariff collections this year might amount to $300 billion,or around 1% of the US GDP. A 15% charge may generate over $500 billion, or little more than 1.5% of GDP, if the $3.3 trillion in goods imports from the previous year are carried over to the next year.

US-India trade negotiations :
The proposed India-US trade agreement, according to Arvind Panagariya, chairman of the 16th Finance Commission, will be a huge boost, making India a very desirable place for investors and leading to liberalization by the nation.

During an interview held at the Indian Consulate General in New York last week,Panagariya stated,”A lot of the current things that are underway are very exciting.“She also mentioned the ongoing US-India trade agreement. Also,the accord between the European Union and India.

The trade agreement with the European Union will follow the one with the United States,and “that door will open very conveniently,”he said.

India will enjoy an open market with the US and the EU thanks to these two trade agreements.The two biggest markets are these two.That makes India a very appealing place for any potential investors because,in effect,the border tension will vanish,which will be a huge game changer, Panagariya stated.

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