What Donald Trump said on tariffs that spooked Indian markets

Indian markets fell sharply on Friday as US President Donald Trump’s latest trade tariff announcement rattled global investor sentiment, raising fears of a full-fledged trade war.

The benchmark Nifty 50 index dropped 0.93% to 22,332.2 by 9:23 am, while the BSE Sensex declined 0.91% to 73,926.27. All 13 major sectors opened lower, with small-cap and mid-cap stocks also falling about 1.3% each.

IndusInd Bank, Mahindra & Mahindra, Tech Mahindra, HCL Tech, Infosys, Tata Steel, Tata Motors, and Maruti were among the biggest losers, while Reliance Industries and HDFC Bank were the only gainers.

What did Trump say?

Trump announced that a 25% tariff on imports from Canada and Mexico would take effect on March 4, moving up the deadline from April 2. He also declared that goods from China would face an extra 10% duty.

The move, which Trump linked to efforts to curb drug smuggling, sparked concerns over escalating trade tensions and the potential impact on global growth.

In a Truth Social post on Thursday, Trump said, “We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” the Republican president wrote. “China will likewise be charged an additional 10 per cent Tariff on that date.”

Impact on global markets

The MSCI Asia ex-Japan index tumbled 2% following Trump’s announcement, dragging down major Asian markets including Seoul, Tokyo, Shanghai, and Hong Kong. Investors feared that the heightened tariffs could stoke inflation and disrupt global trade flows, leading to further volatility in financial markets.

Foreign investor sell-off

Foreign institutional investors (FIIs) sold Indian equities worth Rs 556.56 crore on Thursday, according to exchange data. The Nifty 50 has already lost about 5% in February and is on track for its fifth straight month of declines—the longest losing streak in 29 years.

Trade war concerns

Trump's tariff threats have sparked worries about retaliatory measures from major trading partners, including China, Canada, and Mexico. Mexico’s President Claudia Sheinbaum has sought talks with Washington, while Canada has warned of a firm but strategic response.

“One thing we have learned is to take it step by step,” Canada's industry minister Francois-Philippe Champagne said on Wendesday, adding that, should Trump move forward, Canada is "prepared, and there'll be a targeted, strategic but a firm response.”