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<p>President Donald Trump’s return to the White House in January 2025 marked the beginning of one of the most disruptive phases in U.S. trade policy. His administration introduced a sweeping set of reciprocal tariffs, escalating duties on Indian goods to <em>as high as 50%</em> by mid‑2025. These tariffs reshaped India’s export competitiveness, currency stability, and trading conditions across multiple markets.</p><p>According to iFOREX’s February 2026 analysis, Trump’s revised tariff structure placed 50% duties on key Indian exports, sparking heightened volatility in USD/INR and pressuring the rupee to its historic lows near ₹89.95 per USD in late 2025. <a href="https://www.iforex.in/blog/market-analysis-techniques-for-forex-trading-in-india" rel="noopener noreferrer nofollow">The forex market saw a sharp rise in intraday volatility as traders reacted to each tariff announcement and diplomatic update</a>.</p><h2 id="1-what-triggered-trump-s-tariff-wave">1. What Triggered Trump’s Tariff Wave?</h2><p>The tariff escalation began on April 2, 2025, when the U.S. announced a 26% duty on Indian goods, part of a broader “America First” initiative aimed at reducing the U.S. trade deficit. Negotiations stalled, and by July 2025, the Trump administration confirmed that Indian exports would face:</p><ul><li>25% baseline tariff</li><li>+25% penalty tariff for India’s continued import of Russian crude</li><li>Total: ~50% duty on several categories of Indian goods</li></ul><p>Business Standard reports that while several countries negotiated tariff relief, India failed to reach a settlement, leading to higher duties from August 27, 2025.</p><p>The sectors most severely hit included:</p><ul><li>Textiles &amp; apparel</li><li>Gems &amp; jewellery</li><li>Auto components</li><li>Chemicals</li><li>Electronics</li></ul><p>CNBC’s analysis estimates $8 billion worth of Indian exports became vulnerable under Trump’s tariff structure. <a href="https://www.cnbc.com/2025/08/06/how-will-trumps-50percent-tariffs-on-india-impact-its-economy.html" rel="noopener noreferrer nofollow">[cnbc.com]</a></p><h2 id="2-tariffs-trade-war-the-2026-deal">2. Tariffs, Trade War &amp; the 2026 Deal</h2><p>By late 2025, Indian exports dipped significantly, prompting quiet diplomatic negotiations. In February 2026, both nations announced a breakthrough trade arrangement:</p><ul><li>U.S. reduced tariffs on India to an 18% baseline</li><li>India agreed to lower tariffs on U.S. industrial goods to zero</li><li>India committed to halting Russian crude imports</li><li>India pledged a $500 billion purchase commitment for U.S. goods</li></ul><p>This deal shifted the relationship <a href="https://statt.com/blog/what-the-feb-2026-u-s-india-trade-deal-changes-18-tariff-baseline-industrial-duty-cuts-and-a-500b-commitment/" rel="noopener noreferrer nofollow">from open trade war to “conditional cooperation</a>,” according to the February 2026 STAT report.</p><p>Despite the relief, the retained 18% U.S. tariff still places India at a disadvantage compared to free‑trade partners such as Mexico and Vietnam.</p><h2 id="3-how-tariffs-impacted-the-indian-economy">3. How Tariffs Impacted the Indian Economy</h2><p>A. Export Competitiveness Declined</p><p>Indian goods became significantly more expensive in the U.S. market, reducing export competitiveness. <a href="https://www.business-standard.com/economy/news/the-year-of-tariffs-how-trump-s-policies-affected-india-s-exports-in-2025-125121500449_1.html" rel="noopener noreferrer nofollow">Textile exports—29% of which go to the U.</a>S.—were among the hardest hit.</p><p>B. GDP Growth Slowed</p><p>Goldman Sachs projected a 0.6% GDP slowdown for India due to tariff‑driven trade disruptions, as cited in iFOREX analysis.</p><p>C. INR Volatility Increased</p><p>Tariff uncertainty pushed the rupee to record lows and increased correlation between INR and emerging‑market pairs such as MXN and VND.</p><p>D. Supply Chain Redirection</p><p>U.S. tariffs on China (51.1%) and China’s retaliation (32%) forced Chinese exporters to reroute supply chains through Mexico and Vietnam, creating arbitrage opportunities for Indian traders.</p><h2 id="4-trading-opportunities-for-indian-traders">4. Trading Opportunities for Indian Traders</h2><p>Despite economic challenges, tariff‑driven volatility created lucrative short-term setups:</p><ul><li>USD/INR trading spikes around tariff announcements</li><li>Short‑INR positions during tariff escalations</li><li>Sector‑specific plays (pharma gained from partial exemptions)</li><li>Commodity opportunities in gold, copper, and oil</li><li>Equity rotation trades in Nifty and sector indices</li></ul><p>The iFOREX report notes that volatility is the forex trader’s advantage, and tariff cycles offered consistent directional cues across currency and commodity markets. <a href="https://www.iforex.in/blog/trump-tariffs-2025-forex-trading-strategies-for-indians--1322026" rel="noopener noreferrer nofollow">[iforex.in]</a></p><h2 id="key-takeaways">Key Takeaways</h2><ul><li>Trump’s 2025–2026 tariffs pushed duties on Indian goods to 50%, heavily impacting exports.</li><li>Indian exporters in textiles, chemicals, gems, and autos were hardest hit.</li><li>INR fell sharply, touching ₹89.95 per USD, increasing forex volatility.</li><li>A February 2026 agreement reduced tariffs to 18%, easing tensions but keeping India at a relative disadvantage.</li><li>Tariffs created new trading opportunities in USD/INR, gold, commodities, and EM currency pairs.</li><li>India’s GDP growth likely slowed by 0.6% due to tariff shock.</li><li>Supply chain shifts from China created arbitrage advantages for Indian traders.</li></ul><p>&nbsp;</p>

Trump’s 2025–2026 Tariffs and Their Impact on India: A Complete Market Analysis

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