The global economy today is reeling under a shockwave unleashed by the economic belligerence of one man—US President Donald Trump. In a move that he claimed would usher in a ‘golden period’ for American industries, Trump’s aggressive new tariffs—up to 50 per cent for some nations and 26 per cent for India—have instead triggered a bloodbath across global financial markets. India, like much of the world, has become collateral damage in this spiralling trade war.
The Indian stock market experienced one of its worst openings since the COVID-19 pandemic on Monday. The Sensex plummeted nearly 4,000 points while Nifty collapsed by over 1,100 points. More than Rs 20 lakh crore in investor wealth vanished in mere seconds. The rupee, already under pressure, opened weaker at 85.74 against the dollar. Such widespread volatility across asset classes—stocks, metals, currencies, even traditional safe havens like gold—unmistakably presents a sign of panic. At the heart of this market meltdown lies a resurgence of protectionist economics. Trump's tariffs are a geopolitical message with seemingly grave economic consequences. They aim to punish what Trump perceives as ‘unfair’ trade practices. But in doing so, the US has initiated a tit-for-tat exchange that is now snowballing into a global economic conflagration. China’s retaliatory 34 per cent tariff on US goods has only escalated tensions. The implications are being felt on multiple fronts: higher inflation, slowing global trade, squeezed profit margins, and the real threat of recession.
The effects are reverberating worldwide. Asian markets are in free fall. In the US, futures indicate more pain to come, following a catastrophic Friday that saw the Dow Jones and S&P 500 post their worst week since 2020. The Nasdaq, too, has officially entered bear market territory. For India, the situation is uniquely precarious. Not because of internal weaknesses, but due to its integration into global capital and trade flows. Export-driven sectors like IT and metals have taken a particularly brutal hit. Nifty IT has cracked 7 per cent, with giants like Infosys, TCS, and HCL Technologies tumbling. Metals fared worse, with the Nifty Metal Index down over 7 per cent. This carnage reflects the harsh reality that global sentiment can swiftly dictate Indian market trajectories. More disturbingly, even traditionally safe assets are being dumped. Gold and silver are being sold off as investors are facing margin calls. When fear grips the markets to this extent, liquidity becomes king, and rational asset allocation gives way to a desperate dash for cash.
In such times, the Reserve Bank of India's upcoming policy announcement on April 9 assumes critical importance. While a modest rate cut is expected, what the markets truly need is reassurance. India must insulate itself not just with monetary tweaks but through a bold fiscal and reformist agenda. Tax reliefs for exporters, protection for vulnerable sectors, and mechanisms to attract stable long-term capital are urgently needed. The deeper issue, however, is geopolitical. Trump's tariff gambit is a throwback to economic nationalism at a time when the world is more interconnected than ever. By weaponising trade policy, the US is destabilising a fragile post-pandemic recovery. What is being sold to the American public as ‘fixing’ the system is, in fact, breaking the very global order the US once helped build.
Markets may eventually recover, but the trust deficit created by such unpredictable policymaking will linger. The world must brace for a long winter of economic uncertainty. For India, and indeed the global South, this is a wake-up call to recalibrate trade dependencies, build resilience, and strengthen regional alliances that can withstand the next protectionist storm.