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Trump ups tariff to 15%, a day after levying 10% post SC ruling

TARIFF RESET. Commerce Dept studying implications; no change in trade deal with India: Trump Amiti Sen New Delhi

KEY TAKEAWAYS

• US reciprocal tariffs of 18/25% on Indian textiles, leather, etc., invalidated by US Supreme Court
• A 15% temporary surcharge levied by Trump regime on most imports from Feb 24 for 150 days
• Certain items exempted such as minerals, some fertilisers and agri, pharma, automobiles
• Section 232 tariffs of 50% on steel and aluminium remain unchanged
• Exporters welcome lower tariff but flag uncertainty over Trump’s next steps
• Trade experts say India must leverage the development to negotiate a better trade deal

The US reciprocal tariffs of 18 per cent on Indian goods, established under the framework India-US interim trade deal, have been invalidated following a Friday ruling by the US Supreme Court striking down President Donald Trump’s “illegal” tariffs. In their place, goods will now be subject to a 15 per cent “world-wide tariff,” Trump posted on his social media platform TruthSocial on Saturday. He raised the tariffs from 10 per cent, which had been imposed as a “temporary” levy on Friday on all imports for a period of 150 days.

Official Reactions

“We have noted the US Supreme Court judgment on tariffs yesterday. President Trump has also addressed a press conference in that regard. Some steps have been announced by the US administration. We are studying all these developments for their implications,” according to a statement from the Commerce Department.

While Indian exporters are relieved by the drop in additional tariffs to 15 per cent, the uncertainty on the steps the Trump administration may take is a point of concern. Ajay Sahai from the exporters’ body FIEO noted that February export numbers have been encouraging following earlier reductions, adding, “A further reduction now should be good for exports. But it is still uncertain how Trump will actually react to the judgment.”

Specific Impacts

Trump announced on TruthSocial that he was raising the 10 per cent rate to 15 per cent—the maximum level permitted under Section 122—stating that trading partners had been “ripping off” the US for decades. Effectively, reciprocal tariffs of 25 per cent on Indian labour-intensive goods such as textiles, leather and shrimp, which were to be reduced to 18 per cent under the deal, now face a levy of 15 per cent. However, the Section 232 tariff of 50 per cent on steel and aluminium remain unchanged, as they were not covered by the top court’s ruling.

Improved Leverage

Despite Trump’s assertion that “nothing changes,” trade experts say the ruling strengthens Delhi’s negotiating position in ongoing bilateral talks. Sensitive areas include agriculture market access, digital trade rules, and India’s policy autonomy in dealing with non-market economies.

“There are a lot of issues in the India-US trade agreement that are delicate and have not been agreed to yet. These include market access for cereals and dairy, digital trade, the country’s position on Russian oil and its relationship with China. India must now stay firm on not giving concessions on its sensitivities,” said trade expert Biswajit Dhar.

Future Outlook

Ajay Srivastava of GTRI suggested the ruling should prompt India to re-examine its trade deal with the US. While Trump has indicated he will seek to re-impose similar tariffs under other sections like Section 301 and Section 232, Srivastava noted this would take time due to required new investigations and public justifications. Dhar added that any replacement tariffs Trump works on will likely be product-specific rather than sweeping.

RARE ELEMENTS THAT POWER THE FUTURE

MINE TO MAGNET. With rare earth materials, the real leverage is strategic, not size. Here is a lowdown on the entire ecosystem and what makes them so critical to today’s industrial landscape and for India Kumar Shankar Roy

At the recently-concluded India AI Impact Summit in New Delhi, the spotlight was on the machinery behind AI models like ChatGPT and Gemini, typically powered by Nvidia GPUs. However, AI requires physical systems to store data, move parts with precision, and cool power-hungry servers. Rare earth elements (REEs) are critical to these systems, primarily through permanent magnets like neodymium magnets, which power high-efficiency motors for data centre fans, pumps, and compressors. As AI is increasingly embedded in robots and automation, this dependence grows; these same magnets are also essential for EV motors, wind turbines, industrial robots, and defence systems like radar.

Strategic Leverage

While REEs are embedded deep inside modern machinery, global rare earth output is relatively small in tonnage (390,000 tonnes) and market value (less than $7 billion). The real leverage is strategic, driven by heavy concentration. While China dominates mining, its true power lies in processing and separation, where it controls approximately 90 per cent of global capacity, creating a choke point between ore and magnets. Tightened export controls last year demonstrated how quickly supply chains can be disrupted, forcing industries to scramble for supplies.

What They Are

REEs are a group of 17 chemical elements, including 15 closely-related metals called lanthanides (such as neodymium and dysprosium) plus scandium and yttrium. The name "rare" is actually a misnomer; US Energy Secretary Chris Wright notes they are found everywhere, with cerium being as abundant as copper in the Earth's crust. They are considered economically rare because they occur in low concentrations, often just a few grams per tonne of rock, and are chemically difficult and capital-intensive to separate.

Historical Context

REEs were first discovered in Sweden in the late 18th century. For much of the 20th century, the US led production, particularly from the Mountain Pass mine in California, which supplied 70 per cent of global demand until the early 1980s. From the 1980s, under Deng Xiaoping, China invested heavily in both mining and complex chemical processing. Lower costs and state support eventually allowed China to build dominance across the entire supply chain as US production declined.

Decoding the Value Chain

In the rare earth industry, mining gets headlines, but separation is the moat and magnets are the prize. The chain moves from extracting ores to processing them into oxides (REOs), then refining those into metals or alloys to manufacture high-strength permanent magnets. Value increases dramatically at each stage; a tonne of separated neodymium oxide can be worth roughly 3,500 times the value of a tonne of ore. Magnets represent the largest global end-use for rare earths, followed by catalysts and polishing.

Geopolitical Landscape

China currently controls the supply bottleneck, producing 270,000 tonnes compared to the US (51,000 tonnes), Australia (29,000 tonnes), and India (2,900 tonnes). In response, other nations are building alternative supply chains:

• USA: The Department of Defense has invested hundreds of millions in MP Materials and USA Rare Earth to scale magnet capacity.
• Japan: Uses state-backed financing to lock in non-China supplies, such as supporting Australia’s Lynas.
• Europe: Operationalising the EU Critical Raw Materials Act to accelerate permitting and finance for strategic projects.
• Brazil: Emerging as a key heavy rare-earth source with commercial production starting at Serra Verde in 2024.

India’s Position and Policy

India sits in a paradoxical spot: it holds about 6 per cent of global rare earth reserves (the third-largest at 6.9 million tonnes), yet contributes less than 1 per cent of global mining. India's import dependence for magnets is sharp, bringing in 80 to 90 per cent of materials from China.

Policy response has accelerated with the National Critical Mineral Mission (NCMM) and a ₹7,300-crore Rare Earth Permanent Magnets (REPM) scheme approved in November 2025. India aims to start producing REPM by the end of 2026 in partnership with the private sector. Plans also include establishing "Rare Earth Corridors" in mineral-rich states like Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. Government-owned Indian Rare Earths Ltd remains the primary producer and is building facilities for samarium-cobalt magnets.

Market Action

India currently has no pure-play, listed rare-earth miner or refiner. Globally, investing in rare earths is a supply-chain bet rather than just a mining bet.

• Producers: MP Materials (US) and Lynas (Australia) are direct pathways for production outside China.
• Developers: Names like Arafura and American Rare Earths sit earlier on the curve with higher execution risk.
• Downstream: Australian Strategic Materials and JL MAG offer exposure to value-added materials and magnets.
• Incumbents: China-listed names like China Northern Rare Earth and Shenghe represent the existing scale and domestic backbone.

Investors are advised to assess REE stocks by their position in the chain (mine, separation, metals, magnets) and track execution milestones like commissioning progress and unit costs.

AI crushed software’s 23-year outperformance

MARKET WISE. The rout in global software stocks has been a bottomless pit so far while semiconductor stocks have been on a high

Nishanth Gopalakrishnan

As deals around AI and data centres continued to stack up at the AI Impact Summit, the mood elsewhere wasn’t as cheerful. It’s the software sector we are talking about. The rout in global software stocks has been a bottomless pit so far. Software companies apparently face an existential threat from AI. The debate rages on whether the sell-off is overdone or the disruption is serious, an outcome that no one can predict at this point in time.

The Big AI Threat

Though the threat has existed for around two years now and stocks have been on a slump since last year, the recent rout signals the market’s acknowledgement that the threat is real. Stocks of global software bellwethers have fallen anywhere between 15 per cent and 35 per cent over the past 30 days. Accenture and EPAM Systems are among the biggest losers with losses of 25 per cent and 35 per cent respectively. Back home, the Nifty IT index has declined 16 per cent over the same period.

Gauging the Carnage

Ratio charts are used to better gauge the extent of this carnage. Chart 1 represents the price of the iShares Expanded Tech-Software Sector ETF (IGV) to the Nasdaq Composite index’s value. IGV, which includes frontline firms like Microsoft, Palantir, Oracle, Salesforce, and Adobe, serves as a proxy for the software sector.

The ratio chart has been re-based to 100 with the base set at the market’s bottom in October 2002, after the dot-com bust. While the ratio stayed above 100 for almost the entire period, it has now returned to 100. This implies that the entire 23-year outperformance of software stocks from the start of the technology bull market in 2002 has been completely undone in a few months. The current drawdown of 37 per cent in this ratio surpasses all other drawdowns over this period, including the 2022 reaction to interest rate tightening.

Making Merry

If there is a sector that is making merry while software stocks are trounced, it is the semiconductor sector. In the ensuing AI gold rush, chip designers (Nvidia), memory chip companies (Micron), foundries (TSMC), and equipment suppliers (ASML, Applied Material) are seen as the "shovel sellers". The iShares Semiconductor ETF (SOXX) serves as a proxy for this sector.

The SOXX to Nasdaq Composite ratio is now at an all-time high in the post-dotcom period, resembling an exact mirror image of the IGV ratio chart over the last six months. Meanwhile, the ratio of IGV to SOXX has snowballed into a 70 per cent drawdown, the worst in the post-dotcom period.

Value Trap or Value Buy?

Valuations of all major chip stocks, except Nvidia and AMD, are well above their five-year average multiples. Conversely, valuations of all software stocks are currently below their five-year averages. Given the current exponential disruption, it is not as clear as day and night whether these represent value buys.

Indian Context

In India, the ratio of the Nifty IT index to the Nifty 50 stands at 111 (based on a September 2001 bottom), down from a peak of nearly 200 in late 2021. While multiples are lower than five-year averages, they remain higher than pre-Covid levels in December 2019, when growth was better and there was no threat of AI disruption.

Furthermore, some mid-caps like Tata Elxsi, Tata Technologies, and KPIT Technologies are trading at multiples that are among the highest in the software space globally. Their earnings growth rates do not justify these valuations when global investors remain clueless about the extent of disruption to IT business models.

The AI game is evolving daily, and uncertainty will persist. In this context, caution over aggression would be a better investing approach.

Early retirement plan hits corpus roadblock

FINANCIAL PLANNING. How a middle-aged couple, when their dual income didn’t ensure early retirement, planned for their goals Sridevi V

Deepak and Mrinalini wanted to plan their finances. Deepak, aged 45, wanted to check if he could retire in the next five years due to health reasons. Mrinalini is career-oriented and will continue to work, likely until she is 60—for the next 18 years. They have two children: a daughter, aged 13, and a son, aged 6.

Their Goals

The couple outlined several financial objectives based on current costs:

• Children’s Education: ₹25 lakh for when they turn 18.
• Marriage: ₹40 lakh for their daughter and ₹10 lakh for their son, both at age 25.
• Home Purchase: ₹1.4 crore before retirement.
• Retirement: Monthly expenses of ₹75,000.
• School Expenses: ₹4.5 lakh per year for both kids until their son completes schooling, should Deepak retire early.

Financial Status and Lifestyle

Both partners have considerable exposure to market-related investments and have accumulated a balanced portfolio. They do not want to opt for any loans and are comfortable with an upper middle-class lifestyle, which they do not wish to compromise. Deepak also inquired about moving to an aggressive investing style to reach his goals sooner.

Recommendations

• Emergency Needs: The couple has enough liquidity for emergencies through their fixed income investments.
• Education and Marriage: It was suggested to allocate ₹64 lakh in MF equity for education and ₹23 lakh (from Sukanya Samriddhi and MFs) for marriage.
• Early Retirement Roadblock: Because high-priority goals are funded first, it is highly unlikely Deepak can retire at 50 and purchase a house, as the surplus is insufficient for both goals.
• Revised Strategy: The family needs a ₹4.13 crore corpus by the time Deepak turns 55. They should focus on their home goal by investing ₹1.5 lakh per month for the next five years.
• Long-term Outlook: This strategy allows Deepak to have his own home and retire at 50, provided Mrinalini continues her career until 60. As long as she works, her income will cover family expenses, allowing the retirement corpus to compound and be available when she eventually retires.

TAKE NOTE It is best to start planning for one’s retirement as early as possible; else, the retirement age may have to be postponed.

Signs of a trend reversal

US MARKET OUTLOOK. Charts indicate absence of fresh buyers Gurumurthy K bl. research bureau

Dow Jones, S&P 500 and the Nasdaq Composite indices recovered last week and closed in green. The Dow Jones seems to be struggling to get a strong follow-through rise after making a bullish breakout a couple of weeks ago. The S&P 500 seems to be turning down gradually, and the price action in the coming weeks will need a very close watch. The NASDAQ Composite looks much weaker among the lot.

The US Supreme Court striking down the tariffs levied by President Donald Trump has given a push for the equities on Friday, but it remains to be seen if this can sustain.

DOW JONES (49,625.97)

Support is in the 49,200-49,000 region. The Dow has to sustain above this support in order to go up towards 50,700-50,800 in the short term. In case the index breaks below 49,000, a fall to 48,000 is possible. Broadly, 48,000-51,000 can be the wide trading range, and a break below 48,000 will turn the outlook bearish for a fall to 45,000. Conversely, a decisive break above 51,000 is needed to clear the way for a rise to 55,000 and higher.

Considering the lack of strength in the S&P 500 and NASDAQ Composite, it is better to remain cautious on the Dow Jones rather than being bullish, viewing the market from the sell side rather than making fresh buys.

S&P 500 (6,909.51)

The index has been broadly range-bound between 6,700 and 7,000 since December last year. However, charts indicate that the index is gradually turning down. A fall below 6,770 could be an initial bearish signal, and a subsequent break below 6,700 will confirm the bearish trend reversal. This would increase the danger of seeing 6,600-6,500 and even lower levels. A break above 7,000 and a subsequent rise past 7,100 is needed to negate this fall and open the upside for a rise to 7,400-7,500.

NASDAQ COMPOSITE (22,886.07)

The bounce last week provided some relief, but the view remains negative. The region between 23,000 and 23,300 will be a strong resistance zone that can cap the upside. The index could fall to 21,900 or even 21,600 from here. A strong break above 23,300 is needed to avoid this scenario.

DOLLAR INDEX OUTLOOK

The dollar index (97.79) has been hovering around 97 since the beginning of this month. The trading range so far has been 96.50-98.10. A breakout on either side of this range will determine the next move:

• Above 98.10: Could take the index higher to 99.50.
• Below 96.50: Could drag it down to 95.

TREASURY YIELD

The US 10Yr Treasury Yield (4.09 per cent) is holding well above 4 per cent. Cluster supports are in the 4-3.9 per cent region, suggesting the downside could be limited even if the yield falls below 4 per cent. Immediate resistance is around 4.13 per cent; a break above it could take the yield higher.