Can Trump’s Tariff Pause and RBI’s Rate Cuts Boost Nifty’s Prospects?

Uncertainty is swirling around the global economy. But wait, here’s an opportunity for you! It’s a glimmer of hope for Indian markets. As U.S. President Donald Trump puts a 90-day tariff pause, and the Reserve Bank of India (RBI) has introduced a pro-growth stance, these scenarios have created a window of opportunity for Nifty. However, can this momentum be sustained? Get your pen, paper and your trade charts! 

What are we talking about and what is happening? Well, here is the thing. Before you keep an eye on much expected Nifty surge, you must be aware of every element of this news. Previously, things got really interesting in the ongoing trade drama between the U.S. and China. 

Now, let’s recall the times when former President Trump (past years) used to talk about tariffs (taxes on imported goods). Well, he just cranked it up to eleven. This means he just slammed Chinese goods with a crazy 104% tax tariff. It will be applicable from April 9, 2025, at midnight. So, whatever comes from China into the U.S. from China will be charged this hiked tax. The tax has gone over 100%, and this will change the picture of the trade scenario! New scenario? It has gone up to 125%.

First, Let’s Know ‘How it Began?’

As obvious as it goes economists all over the world are calling this a total ‘economic earthquake’. No doubt that it’s the most aggressive move we’ve seen in ages, and it could mess up the whole global economy. Also, this move will make it harder to get the stuff we need, not to mention even strain relationships with other countries. In other words, this move will destabilize global markets, supply chains, and as well as diplomatic relations. 

Not following the news? Worry not, Corporate Soldiers is here to shed light on this!

How Did We Get Here?- From 10% to 104% Now, 125%

Trump’s tariff strategy has been incremental but relentless. Trump’s been slowly turning up the heat on China for a while now. Corporate Soldiers believe this timeline can help you to understand it. Let’s see how things went south for China!

This compounding approach reflects Trump’s “highly tailored” strategy, layering tariffs to pressure Beijing into concessions. However, China has doubled down, labeling the move “unilateralism and protectionism”.

Genius Move or Epic Fail?

Ever since this news is travelling everywhere, people have begun to lose their minds! People are saying it’s exactly what we need to bring back jobs and make America great again. While others are warning it’s a disaster waiting to happen. 

Idea Behind The Move:

Thought 1:

The thought process behind this move is said to be fixing the ‘We buy too much stuff’ problem. Trump’s administration thinks it’s a sign that the country’s economy is in trouble. So, the idea is to make it cheaper to make things in the U.S., so they don’t have to rely so much on buying stuff from other countries. They believe this move can tackle the persistent U.S. trade deficit. China used to charge higher taxes on things the U.S. sold to them. Now, they themselves are getting hit with a massive tariff. Also, the U.S. is increasing its domestic production and reducing its dependence on imports. Hence, it will boost local economies.

Thought 2:

Also, Trump’s administration is saying that they need to be able to make essential stuff (like medicines and electronics) at their home ground, so they don’t have to depend on countries for these goods. The dependence on other countries also compromises national security. Trump called upon the International Emergency Economic Powers Act (IEEPA) to justify the tariffs and thus cited national security concerns.

Thought 3:

Trump believes that it will make things fair and some countries aren’t playing fair with the trade. They might mess with their currency or have other hidden barriers that make it harder for American businesses to sell their stuff there. This move will counteract unfair trade practices by other nations which include currency manipulation and non-tariff barriers. U.S. exporters often face these barriers abroad, and Trump claims these measures will ensure fair competition. He quotes, ‘Reciprocal means, do it, and we do it back. Can’t get any simpler than that.’

Thought 4:

The other thought behind this move is bringing jobs back to the U.S. Just like ‘Make in India’ move, this will make factories move back to the U.S., especially in industries like steel, electronics, and farming. It’s all part of Trump’s ‘America First’ plan.

There Are Repercussions:

We think that the calculations and numbers don’t add up. Even most economists say Trump’s team is using a weird formula to decide how high to make the tariffs. Instead of looking at what other countries are actually charging in taxes, they’re focusing on the trade deficit (how much we buy vs. sell).

Even countries that are U.S. allies and hold free trade deals with the country are getting hit with these higher tariffs. Couldn’t the Trump administration think of it? So, even though they don’t have high taxes on American goods, they will suffer from such a move. One economist said this whole thing ignores existing trade agreements and doesn’t really make sense.

Also, these huge tariffs are freaking out the global economy. People are worried it could lead to a recession where the global economy shrinks. Since companies have to pay more for stuff, people might stop spending money. This will impact on market. On the other hand, the stock market has been already going down, and Asian markets have been hit hard.

Effect on The Market:

Dear consumers, you will be affected too as prices on things like sneakers, electronics, and wine could go up. This means more burden is added to your pocket. Some economists say trade deficits aren’t really about tariffs. They’re more about how much Americans save versus how much they spend. So, these tariffs might not actually fix the problem. As the U.S. needs China for various kinds of needs, especially electronics and machines, it needs to think again about this tax tariff hike. China is the main supplier for America, so, if they suddenly slap a huge tariff on them, it’s hard for American businesses to find other places to get what they need. This can lead to delays and higher costs.

A Beijing official just spoke of his mind over such a decision, ‘This isn’t just a trade war, it’s a contest over who dictates the rules of the global economy.’ The world now watches to see who blinks first.

Wait, There’s More- The Dramatic Reversal:

Yes, drama just got denser. You might be thinking, ‘Now, what’? Trump has hit the brakes on his trade taxes. After the global response and China’s response, in a dramatic reversal, Trump has announced a 90-day pause on reciprocal tariffs for most countries, lowering the rate to 10%. Wait, don’t take a sigh of relief yet. Because he is turning the heat way up on China and raised their tariffs to a massive 125%! This is after already hitting them with The huge tax just hours before was already hitting them hard, but 125% is much harder. This hike is now sending shockwaves across the global economy. Needless to say that stock will go wild!

After This 90-Day Pause News:

As we expected, after President Donald Trump’s announcement of a 90-day pause on tariffs for most countries. Also, US. now has raised tariffs on China to 125% and as expected the markets are going wild. Let’s see what’s going on!

What’s in For India’s Nifty?

Readers, as you have read every element of Corporate Soldiers’ insightful article, what do you think of the Indian market? Will it surge just like everywhere? As we know Indian stock markets, are closed today because of Mahavir Jayanti. 

Yes, we are hopeful that as Nifty opens on Friday 11th April, it is predicted to jump higher. After U.S. President Donald Trump’s 90-day tariff pause announcement, and easing crude oil prices, we can expect some positive change in the market. And the cherry on top? Recent RBI rate cuts! All these things together have created a more optimistic environment for investors. We are confident that it will be a rewarding time for investors.

RBI’s Stance:

Recent RBI interest rate cuts (the second consecutive time) have reduced the repo rate to 6%. So, not only this move will lower borrowing costs but also stimulate credit growth. This will further support sectors like banking and real estate. Also, India has a unique advantage. Yes, our limited reliance on Chinese imports. It can be our shield from the direct impact of heightened U.S.-China trade tensions. Hence, India remains one of the least affected large economies in this global economic shake-up.

Much Relief Because of Falling Crude Oil Prices:

This is another positive news for the Indian market. As the Brent crude prices have tumbled below $61 per barrel, it’s a relief for India. Why? Because we import nearly 85% of our crude oil requirements. So, lower oil prices can reduce inflationary pressures and will benefit sectors such as FMCG, logistics, and aviation.

Corporate Soldiers is positive that with such favourable conditions in place, we can anticipate a much stronger start for Indian markets! All the best investors, we wish you much-needed luck!