Trump tariffs: Delay in India-US trade deal hurting stock market; what's next?

The India US trade deal is seen as a key catalyst for the domestic market in 2026, but repeated delays have begun to worry investors and stock analysts. Over the past one month, the NSE Nifty and the BSE Sensex delivered flat returns. The market is likely to remain range bound, plus or minus a few percentage points, until there is greater clarity on geopolitical developments, especially US tariffs, Abhishek Basumallick, co founder and fund manager at Shree Rama Managers, said.

"I think yesterday, the US President Donald Trump's comments that he could raise Indian tariffs further has not gone down well with the markets," Basumallick told Business Today. On Tuesday, Sensex was down 0.5 per cent at 85,007.51. Nifty fell 0.34 per cent at Rs 26,162.20. 

Trump hinted at the possibility of hiking tariffs on India for continued Russian oil purchases. "PM Modi's a very good man. He's a good guy. He knew I was not happy. It was important to make me happy. They do trade, and we can raise tariffs on them very quickly," he said.

Vinod Nair, Head of Research at Geojit Investments said one of the key factors for India to perform well going forward is finalising a trade deal with the US. He noted that the market was keenly anticipating the capping of tariffs at 25 per cent from the current 50 per cent and the subsequent finalisation of the full deal over the past 2-3 months.  

"However, persistent negative rhetoric from Trump  is expected to have a detrimental effect on India's stock market performance. On a positive note, till date no significant negative impact is visible on exports, thanks to the resilience of Indian products and services. Nevertheless, if this situation persists, it will harm India's future export outlook, suggesting that the Trump administration is not satisfied by the action taken by India," Nair said.

  
Any easing of punitive tariffs, including reciprocal tariffs, would at best return India to conditions seen in mid-2025 and would not provide a relative extra edge compared with South East Asian peers, Bernstein said recently. 

It noted that the recent trade frameworks signed by the US with Japan and the UK in 2025 were not formal free trade agreements and were implemented through executive orders, making them inherently volatile.