Key takeaways

• President Trump recently announced the decision to impose an additional 25% tariff on Indian goods due to India’s purchase of crude oil from Russia. The additional tariffs, which would take the total tariffs on Indian goods to 50%, would be effective from 28 August, giving both countries time to negotiate. If implemented, the additional tariffs would dent India’s exports and GDP growth.
• From a policy perspective, India has the ability to use both monetary and fiscal policy to support growth. We expect the Reserve Bank of India (RBI) to cut rates by 0.25% in Q4, but don’t rule out further cuts should headwinds to growth intensify. India’s fiscal consolidation over the past few years should allow the government with room to increase spending to boost growth, if required.
• We maintain our overweight on Indian equities, supported by robust macro fundamentals, structural reform momentum and resilient domestic demand. However, we acknowledge that the situation remains fluid given recent tariff developments and escalating trade tensions. We are watching for signals across financial conditions, earnings and sentiment.

Please refer to the full report for details about the event and our investment view.

https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/us-doubles-tariffs-on-india-to-50-percent/