The U.S. stock market witnessed a historic sell-off on Friday, erasing over $1 trillion in market value after former President Donald Trump announced sweeping tariffs on Indian imports. The sudden policy shift jolted global investors, who were already grappling with weak job data, disappointing tech earnings, and broader fears of a slowdown.
Major indices took a steep dive, with the Nasdaq falling over 2%, the S&P 500 dropping around 1.6%, and the Dow slipping more than 1%. The immediate cause was Trump’s declaration of a 25% tariff on Indian goods, effective August 1, 2025. Investors responded with panic, fearing trade retaliation and deeper economic rifts between two of the world’s largest economies.
Trump justified the tariffs by citing India’s trade practices and continued dealings with Russia, particularly oil and defense purchases. He suggested more penalties could follow. Markets viewed the move as destabilizing, particularly for global supply chains and export-driven industries.
India’s economy was not spared either. The Indian rupee fell under pressure, and the Sensex opened lower the next day. Export-heavy sectors like textiles, auto parts, and electronics are expected to take a hit, and small manufacturers—especially labor-intensive firms—may struggle to remain competitive.
Despite some voices suggesting the shock could be temporary, the fallout is already being felt in both nations. With over Rs 27,000 crore in foreign investment pulled from Indian markets in just over a week, and Wall Street experiencing its worst single-day loss in months, the ripple effect is real—and ongoing.
As investors turn their attention to potential countermeasures from India and further remarks from the Federal Reserve, the situation remains tense. The markets, for now, are bracing for more turbulence.
