Apr 07, 2025 08:13 PM IST
Asian markets plummeted due to Trump tariffs, with Japan’s Nikkei down 7.83% and India’s Sensex down 6.84% this year, signaling global economic turmoil.
If last week suggested that the global economic order had been irreversibly changed, then Monday morning showed the magnitude of the disruption. Asian markets were roiled by the Trump tariffs on Monday . In Japan, the Nikkei closed 7.83% down; in Hong Kong, the Hang Seng did worse, closing 13.22% down; and in India, the Sensex, closed 2.95% down. The Sensex has now lost 6.84% since January 1, and is 14.93% down from the peak of 85,978.25 it touched on September 27, 2024.
Southeast Asian countries such as Vietnam, Thailand and Malaysia have become export powerhouses, and it is only natural that the US’ move to levy additional tariffs on imports roils their markets. India isn’t yet an exports powerhouse, but the additional tariff of 26% from imports from the country into the US will affect exporters, especially in certain sectors, although New Delhi has indicated that there could be some opportunities too. And the sharp fall in the price of crude could make India’s finances — the country imports over 80% of its requirement — look better.
The markets may recover, but Monday’s events are suggestive of a deeper turmoil across the world, one that will affect not just global trade, but also disrupt supply chains and increase market volatility. The sweeping nature of the US tariffs, and the intricate inter-relationships engendered by globalisation mean analysts and experts will still be analysing second- and third-order effects well into 2026 (not to mention the flux that will be caused by the US walking back some of the tariffs).
Monday’s market mayhem reinforces the importance of two essential behaviour among retail investors (institutional investors are adults that can take care of themselves) — one, long-term thinking; and two, balanced asset allocation (depending on the life-stage of the investor). In recent years. India’s stock market boom has attracted new investors, some of whom are obsessed with short-term gains; the boom has also increased interest in not just mutual funds (of all hues), but also direct equity investing through online platforms, even in small-town India. This correction is an opportunity, albeit an excessively expensive one, for this breed of investors to learn these lessons.
The tariffs, and their impact on markets may well force the hand of the Reserve Bank of India’s Monetary Policy Committee, and Wednesday may even see a 50-basis point (0.5 percentage point) cut in the policy rate, although most analysts expect it to be half that. But lower interest rates cannot really tackle the uncertainty that Trump’s actions have unleashed.
