US Imposes 50% Tariffs on Indian Imports, Indian ETFs and ADRs React Differently

US President Donald Trump imposed a 50% tariff on Indian imports, sparking a mixed reaction in Indian financial instruments listed in the US. The iShares MSCI India ETF dropped 1% intraday but recovered to close 0.3% lower. Indian American Depositary Receipts (ADRs) posted a mixed performance, with some ADRs like Infosys and Wipro declining, while HDFC Bank and ICICI Bank edged up. The GIFT Nifty was trading slightly higher, up 0.12% at 24,566. India condemned the tariff escalation as "unfair, unjustified and unreasonable" and vowed to protect its national interests.

US President Donald Trump's decision to impose a 50% tariff on Indian imports has sparked a mixed reaction in Indian financial instruments listed in the US. The iShares MSCI India ETF (INDA) dropped 1% intraday but recovered to close 0.3% lower. Indian American Depositary Receipts (ADRs) posted a mixed performance, with some ADRs like Infosys and Wipro declining, while HDFC Bank and ICICI Bank edged up. The GIFT Nifty was trading slightly higher, up 0.12% at 24,566. India condemned the tariff escalation as "unfair, unjustified and unreasonable" and vowed to protect its national interests.

The move comes after Trump signed an executive order imposing an additional 25% tariff on Indian exports to the US, citing India's ongoing Russian oil purchases [2]. The new tariff, which will be effective from August 27, is part of Trump's broader strategy to pressure India into agreeing to US demands in the proposed India-US trade deal.

The iShares MSCI India ETF, which tracks an index of stocks in India, has seen a series of weekly declines, with the fund down 0.6% so far this week and 6.1% over the past month [1]. The U.S. stock market, however, has rebounded this year amid a series of subsequent trade deals announced by the White House.

The tariffs are expected to significantly impact India's exports to the US, particularly in sectors such as textiles, marine, and leather. Experts warn that the 50% tariff rate will hit India’s GDP growth and strain trade relations. The Federation of Indian Export Organisations (FIEO) estimates that the tariffs will impact 55% of India's exports to the US [2].

India's Prime Minister Narendra Modi has expressed surprise at Trump's sharp-tongued ending of their much-celebrated bromance, culminating in a 50% tariff [1]. The move has been seen as a pressure tactic amid ongoing trade deal negotiations, potentially hindering India's GDP growth.

The tariffs have also drawn criticism from economists who warn that doubling the tariff rate to 50% will hit India’s GDP growth. Sakshi Gupta, Principal Economist at HDFC Bank, said, “While Trump's order gives another 21 days for a deal to breakthrough, in case it does not we will have to significantly lower FY26 GDP growth forecast to below 6%, baking in a 40-50 bps hit. This would be double our earlier estimates (of GDP hit from higher tariffs)” [2].

In response to the tariff escalation, India has vowed to take all necessary actions to protect its national interests. The country has also called on the international community to support its stance against the unfair and unjustified tariffs.

The tariffs come as part of a broader trend of increased pressure from the US on emerging markets, with the BRICS bloc—Brazil, Russia, India, China, and South Africa—suddenly looking exposed, fragmented, and vulnerable to US pressure [1]. The US has also increased tariffs on Brazil to 50%, and the US-China détente faces its next critical test on Aug. 12, when tariff terms come back under review.

References:
[1] https://www.marketwatch.com/story/india-etf-struggles-to-snap-weekly-losing-streak-after-trumps-tariff-threat-ebd946e5
[2] https://timesofindia.indiatimes.com/business/india-business/donald-trump-hits-india-with-highest-50-tariff-for-russia-crude-oil-buys-how-will-it-impact-indian-economy-explained/articleshow/123146448.cms