- India appears to be relatively better positioned against the latest U.S. tariffs compared to two of its most significant competitors, China and Vietnam.
- U.S. has imposed a 26% tariff on Indian imports, which is lower than the 34% on China and 46% on Vietnam.
- India has been diversifying its trade partnerships through FTAs, increasing exports to Europe, the Middle East, and Africa, reducing reliance on the U.S. and China.
- Unlike China, which is expected to retaliate, India has taken a more diplomatic approach, calling the latest tariffs as a “mixed bag” and negotiating with U.S. officials.
- The Indian Rupee has weakened, but this could boost exports, making Indian goods cheaper and more competitive in global markets.
- India’s share of exports to the U.S. is lower than its regional peers, at 2% of GDP, and economists peg the impact of tariff hikes on GDP growth at a modest 0.3 percentage points to 0.5 percentage points.
10% tariff applies to all countries – Effective from April 5th.
26% tariff on Indian products – Effective from April 9th.
pressure on the export sector.
Tariff exemptions for certain products:
significant impact.
Automobiles/Auto parts: Tariffs are already in place here.
Copper, Pharmaceuticals, Semiconductors, Wood products, Bullion,
Energy, and other minerals: Tariffs on these might be lower as they are not
readily available in the U.S.
U.S. average MFN tariff is lower than other countries:
to other countries like Brazil (11.2%), China (7.5%), European Union (5%),
India (17%), and Vietnam (9.4%).
Trade Barriers in India:
products, and medical devices pose barriers to U.S. exports.
Removing these barriers could potentially increase U.S. exports by $5.3
billion annually.
Impact Analysis on Indian Stocks:
Steel/Aluminium (Neutral Impact)
The U.S. has already imposed a 25% tariff on steel and aluminium.
Novelis (Hindalco) is positively impacted.
Auto/Auto Parts (Negative Impact)
A 25% tariff will be applied to automobiles starting April 3rd.
Negative (VE): Tata Motors, Sona BLW, Bharat Forge, Balkrishna Industries etc.
Pharma (Positive Impact)
No additional tariffs are being imposed on pharmaceuticals.
Positive (+VE): Glenmark Pharma, Aurobindo Pharma, Dr. Reddy’s Laboratories, Sun Pharma etc.
EMS (Largely Spared) Avalon (40-50% U.S. sales) loses cost edge; Dixon (<10% U.S.) may gainfrom China’s higher tariffs; Amber – nil impact.
Stocks: Avalon (risk), Dixon (potential upside).
IT Services (Indirect Bruising)
No direct tariffs, but client spending takes a hit.
Guidance season may see conservative 2.5-4.5% growth (Infosys, HCLT).
Stocks: TechM, Infosys (better risk-reward); Wipro (negative bias); Mphasis, Zensar, KPIT (midcap winners); TCS, HCLT, LTIM (higher risks).
Oil & Gas (Ripple Effects)
Tariffs on Russian/Venezuelan crude push India to pricier options, squeezing margins. Stocks: Reliance, OMCs (negative).
Consumer Durables, Electricals, Paints
(No Major Impact as these industries are domestically driven)
Gems and Jewellery sector (negative)
Industry feels tariffs are higher than expected and might lose market share.
Stocks: Goldiam International, Renaissance Global.
Agriculture (Most badly hit)
Tariffs could erode India’s price advantage, disrupt supply chains and open the door for rival exporters from Vietnam, Thailand and South America
Stocks: Avanti Feeds, Apex Frozen.
Textiles (expected to benefit)
Tariffs on key rivals like Vietnam, China, Sri Lanka, Bangladesh are higher.
Stocks: KPR Mill, Kitex Garments, Welspun Living etc.
Several countries with low per capita incomes have been hit by the highest tariffs. The tariffs will certainly have very significant economic consequences for the US and the rest of the world. There could be high inflation combined with slower growth.
The long-term impact hinges on Indian market adaptations, government policy responses, and the evolution of U.S.-India trade relations.
Increased prices in the market may hurt US consumers more and U.S may drag the EU into recession.
Major global economies will definitely retaliate against Trump, forming a united alliance against the U.S and small countries may shift their supply & demand to countries that don’t take undue benefit out of them like India.
