Tue Feb 04 18:28:47 IST 2025: ## Nomura Warns of Increased US Tariff Risk Despite Sensex Surge

**Mumbai, India** – While the Indian stock market experienced a significant rally on Tuesday, with the Sensex soaring nearly 1400 points, Nomura Holdings, a leading Japanese financial services group, issued a cautionary note. Despite a delay in the implementation of US tariffs on Mexico and Canada, Nomura has revised upwards its forecast for US tariffs, citing increased likelihood of their eventual imposition.

The surge in the Indian market saw the Sensex close at 78,583.81, up 1.81 percent, and the Nifty at 23,739.25, up 1.62 percent. This follows a muted retaliatory response from China, which implemented tariffs of 10-15 percent on certain US imports including coal, LNG, and crude oil.

Nomura’s upward revision stems from the belief that the recent increase in China tariffs represents the largest single tariff hike enacted by the Trump administration to date. The brokerage firm notes that if these, and other potential tariffs, are fully implemented, their total impact will surpass the combined tariffs imposed during Trump’s first term. Nomura’s previous projections anticipated more tariffs than the market consensus, but the already announced tariffs essentially match their total projected magnitude for 2025, albeit targeting different countries.

Furthermore, Nomura highlights increased risk due to Trump’s stated intentions to impose tariffs on the European Union and consideration of targeted tariffs on goods like semiconductors. The brokerage outlined four scenarios to illustrate the potential economic impacts of varying tariff levels:

* **Scenario 1 (Baseline):** Limited additional tariffs, resulting in moderate inflation and GDP growth slowdown.
* **Scenario 2 (Baseline + Canada/Mexico Tariffs):** Higher inflation and a more significant GDP slowdown.
* **Scenario 3 (Baseline + Higher Canada/Mexico Tariffs):** Substantially higher inflation and a steeper GDP decline.
* **Scenario 4 (No New Tariffs):** A scenario where no further tariffs are implemented, resulting in lower inflation and stable growth.

Nomura’s analysis suggests that increased tariffs could significantly impact US inflation and GDP growth, with revenue generated from tariffs ranging from approximately $190 billion to $350 billion annually depending on the scenario. The firm’s warning serves as a reminder that while market optimism is currently high, the potential impact of escalating trade tensions remains a considerable factor to consider.

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