Finance Minister On Budget 2025, US Tariffs On Canada, Mexico | Rise With Profit

This is the daily morning update from NDTV Profit. It’s been a busy weekend for all of us that track the capital markets, because the Union Budget for the next financial year was presented, as you know, over the weekend.

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Let me first take you through what’s happening overseas. The big talking point globally is the imposition of tariffs by the Donald Trump administration on the US’ trading partners. In what some are calling the first shots fired in the next tariff war, general levies of 25% each on Canada and Mexico and 10% on China were imposed. Trump signed orders for the tariffs on Saturday, according to White House officials who briefed reporters on condition of anonymity.

The tariffs take effect at 12:01 a.m. on Tuesday, and it’s unclear if that offers a last-chance window for a deal. They apply to a wide range of goods from three of the biggest US trading partners. Canada and Mexico announced their own plans for retaliatory tariffs

Prime Minister Justin Trudeau said Canada will respond by placing 25% counter-tariffs on C$155 billion ($107 billion) worth of American-made products, while Mexico’s President Claudia Sheinbaum said she instructed the economy minister to kick off a response plan that includes retaliatory tariffs against the levies. Trump’s orders also included retaliation clauses that would increase US tariffs if the countries respond in kind. The new measures will be on top of existing trade levies on those countries.

Now, understandably, global markets are reacting sharply to this. The dollar index, which had cooled off, has once again spiked sharply. It measures the strength of the greenback against a basket of currencies. As of this morning, it was trading at 109.7, only about 0.4% from 52-week highs. Risk assets globally have taken a hit. After Friday’s fall, futures on Wall Street were pointing to a weak start to Monday. The three early risers in the Asia Pacific region were sharply lower at the start, with the Nikkei 225 and the Kospi in South Korea lower by over 2%. The early indications are for a negative start to trade for Indian equities too.

For India, the next big cue will come from the Reserve Bank of India and its Monetary Policy Committee at the end of the week. After a slew of measures announced recently to bolster liquidity, there are some that are anticipating a cut in policy interest rates. In the meanwhile, equity markets will continue to take cues from developments overseas and from the ongoing earnings season.

And of course, expect reactions on account of Budget 2025 to continue, as the finer details are studied and understood. Finance Minister Nirmala Sitharaman spoke exclusively to NDTV Profit after the speech and said her bold announcement to slash taxes for individuals was made based on the assessment of standard of living of Indians in this middle-income segment and was for the people, to the people and by the people of India.

She said a key focus in this budget is on boosting consumption, as it holds great potential for economic growth. If consumption increases and demonstrates greater investment possibilities, it could serve as a powerful trigger for further economic development, Sitharaman said.

Sitharaman also made it clear—capital expenditure remains one of India's primary growth drivers, and the rising focus on consumption is an addition, not a pivot. In her interview, she said the government had not moved away from capex. Consumption is just an addition.

In other news, there’s source-based information that the draft of the new Income Tax Bill is expected to be unveiled on Feb. 6. The proposed bill aims to bring sweeping reforms to the current Income Tax Act and could potentially see up to 3 lakh words slashed from the near 6 lakh words at present. The bill could suggest ways to bring in more taxpayers into the formal system and increase overall tax revenue.

In other news, channel checks are suggesting that Indian steel mills may hike prices of flat products by Rs 1,000 per tonne this month.

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