US President Donald Trump signed an executive order imposing a 25 per cent tariff on all foreign-manufactured automobiles, effective April 2. The move, which follows months of trade tensions, has triggered responses from major trading partners.

US markets fall sharply ahead of tariff announcement

The US stock market declined before the official announcement, with major indices reacting negatively to trade concerns. The Dow Jones Industrial Average fell over 500 points in pre-market trading, while the Nasdaq and S&P 500 also recorded steep losses.

Global markets react: Europe, Asia face pressure

European markets opened lower, with Germany’s DAX and France’s CAC 40 declining over 1.5 per cent. The automotive sector led the losses, as major European carmakers, including BMW and Volkswagen, saw their stocks slide.

Asian markets also came under pressure, with Japan’s Nikkei 225 falling over 2 per cent as auto stocks faced selling pressure. Japan’s Prime Minister Shigeru Ishiba stated that his government was evaluating countermeasures against the US decision.

India’s trade impact

India, which exports auto components to the US, may see a limited impact. Industry analysts note that while major Indian auto exporters like Tata Motors and Bharat Forge could face short-term headwinds, the direct exposure remains lower compared to European and Japanese manufacturers.

Anil Singhvi’s take: ‘Market jitters could continue, but long-term impact limited’

Market guru Anil Singhvi weighed in on the impact of the tariffs, stating that the global market reaction was expected but could stabilise in the coming weeks. “There will be a knee-jerk reaction, especially in auto stocks, but India’s direct exposure remains limited. Investors should not panic but instead look for opportunities in strong domestic auto and ancillary stocks,” Singhvi said.

He also pointed out that FIIs may react negatively in the short term, but Indian markets could remain resilient. “Global volatility is a concern, but India’s macroeconomic fundamentals are strong. Any dips in quality auto stocks could be a buying opportunity,” he added.

Europe, Canada oppose auto tariffs

European Union officials have strongly opposed the move, with European Commission President Ursula von der Leyen calling it “unjustified and disruptive to global trade.” Canada’s Prime Minister Mark Carney also criticized the decision, stating it was a direct hit to North American trade relations.

Trump’s trade stance: Shifting signals

Trump’s tariff announcement comes after a brief period of softening rhetoric on trade. Earlier this week, he suggested a more measured approach, but the sudden implementation of the tariff has caught markets off guard.

What’s next? Additional tariffs expected

The latest move is part of a broader trade agenda, with additional levies on pharmaceuticals, semiconductors, and lumber expected in the coming weeks. The US-India trade meeting next week will be closely watched for further developments.