Trump Tariff Cut Sparks Market Rally

After suffering heavy losses over the past few days, the stock market surged on Tuesday. While there were expectations that the Budget announced by Union Finance Minister Nirmala Sitharaman on February 1 would provide direction to the market, markets crashed even on Budget day. At this stage, in an unexpected development, an announcement by U.S. President Donald Trump on Monday night about reducing tariffs — and its welcome by Indian Prime Minister Narendra Modi — suddenly improved market sentiment. As a result, markets rallied strongly from Tuesday morning till closing. The BSE Sensex ended at 83,739 points, gaining 2,072 points. A similar trend was seen on the NSE as well. The NSE Nifty closed at 25,727 points, up by 639 points. Irrespective of sectors, the majority of stocks ended with gains.

Donald Trump’s announcement that the existing 50 percent tariffs on India would be reduced to 18 percent was the main reason behind the market rally. There are expectations that this trend may continue for a few more days. However, the issue has now triggered a political controversy. Leader of the Opposition in the Lok Sabha, Rahul Gandhi, strongly alleged that Prime Minister Narendra Modi had succumbed to pressure from the United States. He questioned how an agreement that had been stalled for four months was suddenly concluded. He alleged that Modi compromised due to factors such as cases against Adani in the United States. He accused Modi of compromising on the trade agreement and “selling out the country and the suffering of farmers.” The government, however, maintains that there has been no compromise on farmers’ interests and stated that it is examining the option of purchasing oil from Venezuela.