Why The Stock Market Crashed Today, Trump’s Trade War Explained

By Author: Indira Securities
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Trump’s Trade War 2.0: Tariffs, Tactics & Turmoil
Well, if you’re the President of the United States—a lot.

Over the weekend, Donald Trump took to his favorite battleground—Twitter—to announce a new wave of tariffs, officially acting on his November 2024 campaign promises. The move, as dramatic as a season finale twist, imposes sweeping trade barriers on countries Trump believes are taking undue advantage of the U.S. economy.

Here’s what’s on the table:
25% tariffs on all goods imported from Mexico and Canada (except energy products, which get a “discounted” 10% tariff).
10% tariffs on all goods imported from China.
Retaliation clauses—which means if these countries fight back with countermeasures, the U.S. will turn up the heat even more (and Canada looks like the prime contender for that battle).
Why the Tariff Tantrum?
According to Trump, these tariffs are a punishment for:

Mexico & Canada – Failing to curb illegal immigration and drug trafficking (especially fentanyl, which has been a growing crisis in the U.S.).
China – Unfair ...
... trade practices, which Trump has criticized since his first term.

Framing the move as essential to “Making America Great Again,” Trump argues that these tariffs will:

Boost domestic manufacturing
Create American jobs
Counteract unfair foreign competition
But while this might be good politics, the economic impact is a whole different story.

Market Mayhem: The Economic Fallout
$1.4 trillion worth of goods were imported by the U.S. from Mexico, Canada, and China in the past year. Meanwhile, U.S. exports to these nations stood at $800 billion.

Auto manufacturing is on edge—since both Mexico and Canada play a major role in U.S. vehicle production.
Oil prices could surge—since the U.S. refines heavy crude from Canada into gasoline.
Inflation fears are creeping in—since higher tariffs = higher costs = higher prices for consumers.
And guess what? The markets did NOT take this lightly.

Immediate stock market sell-off—with equities tied to international trade taking a hit.
The U.S. dollar strengthened against the Chinese yuan, Mexican peso, and Canadian dollar, reflecting fears that more tariffs could be imposed on Europe and the UK next.
Currency depreciation tactics—to offset tariff impacts, the affected countries might let their currencies weaken.

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What’s in It for India?
While the U.S. and its biggest trade partners battle it out, India could emerge as a surprise beneficiary.

India’s trade footprint in the U.S. isn’t as large—only 3.2% of the U.S. trade deficit is linked to India, far behind China, Mexico, and Canada.

Fun fact: According to Oxford Economics, India was already the fourth-largest winner from Trump’s earlier tariffs on China (2017-2023).

And it looks like India is playing its cards smartly this time too.

In the latest Union Budget, India has:
Reduced tariffs on key U.S. exports, making it easier to trade with America:

Motorcycles (Below 1,600cc: 50% ? 40% | Above 1,600cc: 50% ? 30%)
Fish hydrolysate (used in aquatic feed) 15% ? 5%
Ethernet switches 20% ? 10%
This move signals India’s willingness to accommodate U.S. trade concerns, likely in a strategic bid to stay out of any future tariff battles. Smart move, right? If you can’t be their best friend, at least don’t be their next enemy.

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What’s Next?
Trump’s latest tariff war is both a political stunt and an economic gamble.

Will it bring back U.S. manufacturing like he promises?
Or will it spark higher prices, supply chain disruptions, and retaliation from major trade partners?
Either way, this is shaping up to be a defining moment for global trade in 2025.

The next few months will tell us if this is just a negotiation tactic—or if we’re heading for a full-blown trade war. Stay tuned.

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