India Silent, Trade War Deepens

THE TAKE 

India Can’t Afford Silence As Trade War Deepens

It’s not the tariffs the markets are worried so much about. It’s the recession in the United States that could follow has everyone running for cover. 

Goldman Sachs has raised the odds of a US recession to 45% from 35%, the second time it increased its forecast in a week. At least seven investment banks have similarly raised their recession risk forecasts, with JP Morgan at the top of the table with odds of 60% on fears that tariffs will not only ignite US inflation but also spark retaliatory measures from other countries, Reuters reported.

As each day passes, the situation becomes intractably worse. The longer the trade crisis lasts, the more determined countries and companies will be to ensure they are better protected in future.

Companies will still come around as they have shareholders to report to and growth to demonstrate. Countries don’t face these shortcomings, not in the short term for sure. But companies also look for direction from countries, particularly the ones where they are domiciled.

China’s Surprise Move

China’s establishment has clearly demonstrated, as of Monday, that it will fight. This is unlike India, which has clearly demonstrated it does not want a fight. 

China’s move was not expected.

On Friday, China responded to America’s “reciprocal” tariffs with blanket duties of its own and additional export controls. The Communist Party’s official newspaper followed that up with a Monday editorial declaring Beijing is no longer “clinging to illusions” of striking a deal, even as it leaves a door open to negotiations, Bloomberg reported.

Then came a statement from Chinese president Xi Jinping asking for strengthened efforts to “fully unleash” the country’s consumption potential to spur growth. According to a Bloomberg report, state-run broadcaster China Central Television reported the Chinese leader as saying revitalising consumption, expanding domestic demand and enhancing investment efficiency were on top of the country’s agenda, without specifying when and where he made those comments.

Meanwhile, Trump responded by saying he would add an additional 50% tariff on China starting Wednesday if the country doesn’t withdraw its retaliatory tariff increase on the U.S. “Additionally, all talks with China concerning their requested meetings with us will be terminated!” he wrote according to the Wall Street Journal.

India Must Answer Questions

While India is not going the Chinese route and does not need to, possibly the time for silence is now ending. 

A trade war is a war, and the world is in the middle of it.

In any war, citizens look to the leadership for direction, and India’s government has been silent so far. 

Silence is a good strategy in terse situations like this, but only works up to a point.

India is a large domestic market, and that is what is keeping stock prices from taking the same level of hit as many other countries, particularly export-facing ones, including China and Japan.

But tens of millions of Indians, including those who run large and small businesses, need a sense of where we stand at this juncture. And it is tough and unfortunate if we have to glean everything from tidbits of information that emerge through source-attributed stories.

Remember, we often say we are the fastest-growing large economy in the world. 

If so, then surely we could be batting more on the front foot on this.

Professor Steven Altman, director of the DHL Initiative on Globalization at NYU Stern’s Center for the Future of Management, told me over the weekend that it was important to emphasise that the US represents only 13% of imports and 9% of exports. So the US is an important player in world trade, but it's far from large enough to be able to unilaterally determine the future of trade. 

If that is the case or at least close to it, what could India’s strategy and Plan B or C be? 

Will we help businesses in terms of fiscal and monetary support if their enterprises are hit? An interest rate cut seems imminent but could there be some fiscal support for export industries who could be hit ?

Does India have new lines of trade opening up with other countries? What about past discussions that we could revive, as we evidently have with the European Union? 

And at a more fundamental level, what is India’s role in this new world?

Not every question must be answered in granular detail at one go, and some details on trade talks will always remain close to the chest.

Professor Altman told me that he had quite an optimistic expectation about trade growth for India, predicting that India in his baseline scenario would achieve about six percent of the world's trade growth, the third largest amount after only China and the United States. 

Moreover, he said the current scenario probably creates opportunities for India's share to be even larger.

How India navigates this environment will, of course, determine how the future shapes up.

Which is why we are past the point of silence now.

CORE NUMBER

Rs 30 trillion

This is how much the Indian markets lost in market capitalisation by Monday since peaking on March 24, 2025, Business Standard reported. The Nifty50 and Sensex, which had earlier recovered 8% since September lows, were rattled by US president Donald Trump’s fresh tariff threats. Metal majors like Vedanta and Tata Steel led the losses. Only 40 Nifty 500 stocks gained, with Tata Consumer and Aster DM among the few winners. Rising global trade tensions, especially US-China flare-ups, spiked India's VIX by 60% and triggered the Sensex’s steepest fall since June 2024.

—📉 Rate Cut On The Cards? The Reserve Bank of India’s Monetary Policy Committee kicked off its first meeting of FY26 today and is widely expected to cut the repo rate by 25 basis points on April 9. Easing inflation and global headwinds—including Trump’s new tariff threats—may have opened the door for a more accommodative policy stance, Business Standard reported. The last rate cut came in February, when the RBI reduced the repo rate to 6.25%—the first such move in nearly three years. Markets will be watching closely to see how far the central bank goes this time.

—🏮🧯 Prices Gas-sing Up! Union Oil Minister Hardeep Singh Puri announced that liquefied petroleum gas (LPG) will cost an additional 50 rupees per cylinder starting April 8, according to an Economic Times report. Under the Pradhan Mantri Ujjwala Yojana, a cylinder will cost Rs 550 versus Rs 500; non-Ujjwala scheme cylinders will now cost Rs. 853. He added that the government will review these prices bi-weekly. The government also increased the excise duty on petrol and diesel by two rupees per litre, but Puri clarified that the hike won’t affect their retail prices. 

—📉 Export Dreams To Derail? India’s merchandise exports to the US could drop by $5.76 billion (6.4%) in 2025 due to steep new American tariffs, says think tank Global Trade Research Initiative (GTRI). Key sectors hit include seafood, electronics, gold, auto parts, and machinery. A 26% duty takes effect from April 9, sparing pharma, energy, and semiconductors. While losses loom, gains may emerge in textiles, chemicals, and pharma. Exports like smartphones and seafood face sharp declines, with India's trade competitiveness under pressure amid changing US tariff dynamics.

—🍊 ‘Orange Monday’ Alert! Markets across the world continued crashing since US president Trump announced tariffs against most trading partners of the US, including India. The US’s Dow Jones plunged, as did Japan’s Nikkei, China’s CSI300, Hong Kong’s Hang Seng Index, and markets in Australia and India. Social media users recalled 1987’s ‘Black Monday’ when the American Dow fell by 22.6%. “I say we call it "Orange Monday,” said one user. Another added, “They’re saying Orange is the New Black Monday,” complete with an AI-generated image of Trump.

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas