Trump’s 25% tariff: Use market dips for lump-sum buys, diversify globally, say experts

The BSE Sensex tanked over 600 points and the Nifty 50 185 points in morning trade reflecting the dampened mood in the market following US President Donald Trump’s announcement of 25 percent tariffs on Indian goods from August 1. He also decided to slap a penalty—unspecified so far—for buying energy and military equipment from Russia. Although the markets staged a sharp recovery later, the tariff is expected to continue casting a shadow in the days ahead.

“Despite the unpredictable policymaking of the US, the market was expecting a tariff deal to work out as in the longer term, US-India strategic interests are aligned. The market will hope for a 'TACO' trade if better senses prevail… I hope and pray that this unilateral imposition accelerates Indian policymaking to be growth-supportive. Our biggest deterrence continues to be GDP size and competitiveness,” Nilesh Shah, managing director, Kotak Mahindra Asset Management Company, said on July 30. TACO is the tongue-in-cheek acronym for 'Trump always chickens out', referencing his past U-turns on US trade policy.

Against this backdrop, many see the sharp decline in the stock market as an opportunity for retail investors looking to meet their long-term goals who, thy advise, should avoid knee-jerk reactions, stay diversified and, in fact, keep an eye out for bargains.

Also read: Donald Trump slams India and Russia, says they can take their 'dead economies down together'

Market watchers believe US-India negotiations will continue despite Trump’s hawkish statements and hope that the tariffs could be scaled down eventually. “The Indian economy and prospects remain on a strong footing, so retail investors should not be swayed by one adverse news event. Any sharp fall in the markets could present a buying opportunity and retail investors with cash in hand can look to deploy it to make lump-sum investments,” says Raghavendra Nath, managing director, LadderUp Wealth Management.

Financial advisors always emphasise the importance of diversification across market caps and asset classes to absorb such shocks and balance the risks. “Retail investors should ask themselves whether they are well diversified not just across sectors (and not concentrated in one sector or stock) but also have exposure to global businesses. A minimum 5-10 percent diversification is worth considering,” says Ashish Khetan, founder, Serenity Wealth, a Securities and Exchange Board of India-registered fee-only investment advisor.

Also read: 25% Tariffs, 100% Wake-Up Call: Rethinking India’s trade sovereignty

International mutual funds’ direct investments in overseas stocks were valued at around Rs 58,000 crore as on June 30, 2025. In addition, Indians can also invest in offshore funds housed in GIFT City—for instance, DSP IFSC, a unit of DSP Asset Managers, recently launched DSP Global Equity Fund.

Resident and non-resident Indians are increasingly diversifying their portfolios through GIFT City, leveraging its globally aligned regulatory ecosystem and tax-efficiency.