The United States President, Donald J Trump, has announced a partial reprieve (a chunk of the additional ones, actually) from his reciprocal tariff imposition till July 9, 2025. India, which had been hit with a 26 per cent reciprocal tariff effective from April 9, has caught a temporary breather. But analysts warn — now is not the time for aluminium producers to let their guard down.
The announcement to reprieve India and others from reciprocal tariff
In a post on Truth Social, Trump declared, “Based on the fact that more than 75 countries have called representatives of the US to negotiate a solution and that these countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorised a 90-day pause, and a substantially lowered reciprocal tariff during this period, of 10 per cent, also effective immediately.”
Supporting reasons for such a sudden decision
Trump’s sweeping global tariffs sent shockwaves through stock markets across the globe, with the S&P 500 on Wednesday teetering dangerously close to bear market territory.
Unfazed by the market plunge, Trump had stood firm, asserting that tariffs would rake in “billions of dollars” and accusing other nations of taking advantage of the United States through unfair trade policies.
But apparently, even Trump couldn’t stick to that script forever. Could he?
Trump’s ‘insider trading’ controversy
Adding fuel to the fire, Trump posted “It’s a good time to buy” on social media just hours before he paused the tariffs, a move that’s now landed him in hot water. Accusations of market manipulation are swirling, with Democrats calling for an investigation.
As markets flirted with a full-blown bear phase, fears of a ‘Black Monday 2.0’ loomed large. But Trump’s tariff pause triggered a swift turnaround, the S&P 500 shot up nearly 10 per cent, marking its biggest one-day jump since the 2008 financial crash.
Now, Democrats, including Senator Elizabeth Warren and Adam Schiff, are demanding answers, alleging the president leveraged inside knowledge to spark a stock market rally.
Indian industry watches closely
While the pause in export duties may offer short-term relief, experts caution against complacency. They stress the importance of protecting the domestic aluminium market from potential dumping, especially from countries like China and the Middle East.
Ministry of External Affairs Spokesperson Randhir Jaiswal said on Wednesday that discussions on reciprocal tariffs are actively underway between Indian and US trade negotiators, with hopes pinned on a swift, mutually beneficial trade agreement.
“India and the United States are very strong partners when it comes to trade relations, economic relations, investment relations, and commercial relations, and we hope that these relations will continue to foster and deepen. As far as trade issues are concerned, we are in negotiations for a bilateral trade agreement, and hopefully, we will be able to address these issues and conclude this particular agreement expeditiously,” he stated.
Notably, India remains the only country that has been actively pursuing a trade agreement with the US since the beginning of Trump’s tenure.
Which tariff is still in play?
The reciprocal tariffs announced on April 2 have been suspended for 90 days across the board — except for China. However, the baseline tariff that came into force on April 5 still holds for all.
Meanwhile, the original 25 per cent tariff on aluminium and steel, first implemented in March, remains untouched. Trump’s pause does not extend to these, nor to the 25 per cent duty on automobiles that began on April 3. The tariff on auto parts is also set to go into effect on May 3.
While Canada and Mexico were spared in the latest round, their products remain subject to 25 per cent fentanyl-related tariffs unless they comply with the US-Mexico-Canada Agreement’s origin rules. Those duties remain firmly in place, with an indefinite exemption for USMCA-compliant goods.
Benchmark equity indices surged on Friday, buoyed by hopes of an impending India-US trade deal after Washington announced the 90-day tariff reprieve. But will this market momentum stand the test of time?
“There is no room for a sustained rally in the market in the present uncertain context. But investors can take relief from the fact that Indian macros are good, and we are one of the least impacted countries in this trade war. Investors have to be cautious and should prioritise safety over returns. Safety now is in fairly valued large-caps,” said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
