Markets will react negatively to the imposition of tariff on India, according to Nilesh Shah, managing director of Kotak Mahindra AMC following the latest announcement by Donald Trump stating the tariffs to be imposed on India.
"Despite the unpredictable policy making of US, market was expecting a tariff deal to work out as longer-term US India strategic interests are aligned," Shah said
Shah expects the markets to experience a 'TACO' trade if better senses prevail. He also emphasised that China is defying US and UN sanction on Iran oil, Myanmar and Russia trade.
Shah hopes that the unilateral imposition will accelerate Indian policy, "making it more growth supportive". "Our biggest deterrence continues to remain GDP size and competitiveness," he said.
The development comes as US President Donald Trump announced a 25% tariff on Indian exports on Wednesday ahead of the Aug. 1 deadline. Trump also hinted at further unspecified penalties linked to India's continued imports of Russian military equipment and energy.
The Indian government has "taken note" of Trump's remarks and is "studying" the implications of the tariffs, as well as additional penalties linked. It reiterated its commitment to a fair and balanced trade agreement, adding that it would take "all steps necessary to secure our national interest".
India and the United States have been engaged in talks to finalise an interim trade deal. Despite multiple rounds of dialogue, they are to reach a mini or an interim trade agreement.
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