Investors should watch out for export-facing sectors like gems and jewellery, textiles, marine products and pharma, where the US administration had imposed a 100% tariff on patented and branded drugs, and the auto sector.
Kranthi Bathini, Director – Equity Strategy at WealthMills Securities, called this a big sentiment booster for Indian markets while a blow to the Trump administration. His tariffs created a lot of uncertainty and ambiguity for the world, he added.
He, however, cautioned investors to watch the developments over the next few days and what the Trump administration will do as a “face saving” measure. He said that Trump weaponised tariffs and even the 10% global tariff must also be vetted by the US Congress. Since trade does not come under the purview of emergency measures, his follow-up decisions will also be subject to scrutiny, he opined.
Following the SC decision, Trump signed documents to impose a 10% tariff on imports from all countries, which he said will be “effective almost immediately.”
“It is my Great Honor to have just signed, from the Oval Office, a Global 10% Tariff on all Countries, which will be effective almost immediately,” he said in a post on Truth Social.
While the 18% tariff burden is likely off India’s back, more details will emerge in due course. But the new global tariff of 10% applies on Indian goods for now. An ANI report quoting a White House official said that India will have to pay 10% until another authority is invoked. “Yes, 10% until another authority is invoked.”Market veteran Gurmeet Chadha also welcomed the US Supreme Court’s decision, saying, “Supreme Court ruling on tariffs is welcome news especially for under-owned markets like India. This is also a political setback with midterms approaching and low approval ratings.”
“Focus will shift on boosting the economy, lowering inflation. Means lesser global uncertainty and flip-flops,” the Managing Partner and CIO at Complete Circle Consultants said in a tweet.
Also read: Trump made tariffs central to his presidency. Chaos may come next
On Saturday, Trump said that he was raising the global tariff as he wants to impose to 15%, up from 10% he had announced a day earlier.
SC ruling on India: what it means for markets?
“Removal of reciprocal tariffs will free about 55% of India’s exports to the US from 18% duty, leaving them subject only to standard MFN tariffs,” Global Trade Research Initiative (GTRI) analysis said, as reported.
According to the think tank, Section 232 tariffs will continue, 50% on steel and aluminium and 25% on auto components. Meanwhile, products accounting for roughly 40% of export value, including smartphones, petroleum products and medicines, will remain exempt from US tariffs, the report said further, citing the GTRI analysis.
So, investors should track movement of metal stocks for likely disappointment while monitoring the EMS and generic pharma space as well.
Reacting to the ruling, frontline indices on Wall Street also ended higher, with the Dow 30 closing with gains of 0.5%. The S&P 500 index and Nasdaq Composite finished with an uptick of 0.70% and 0.90%.
Also read: US Supreme Court ruling overturning Trump tariffs could spook bond vigilantes
Sudeep Shah, Vice President & Head of Technical and Derivative Research Desk at SBI Securities also expects a positive start to the next week. “This development is a significant positive for export-oriented sectors, as businesses will now be subject to a uniform 10% global import duty under Section 122 of the Trade Act of 1974 for 150 days — a provision that has been invoked for the first time,” he said.
In his view, sectors such as IT, pharma, metals, textiles and energy stand to benefit from the reduction in tariff uncertainty. The introduction of a uniform 10% rate across countries also removes the relative disadvantage arising from differential trade arrangements with the US, he opined.
Shah said situation remains fluid as there is uncertainty surrounding the approximately $175 billion collected under tariffs over the past year and the potential implications of refund claims.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
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