Trump's 25% Tariff Shock: IT, Pharma, Steel Among Sectors Likely To Be Hit

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5 days ago

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Trump's 25% tariff on all Indian imports from August 1 is expected to trigger volatility in key export-driven sectors with significant US exposure
With the US administration's surprise decision to impose a 25% tariff on all Indian imports starting August 1, analysts are bracing for targeted volatility across key export-led sectors—particularly those with heavy US exposure.
'Sentimentally, the announcement is viewed as negative," said Narendra Solanki, Head of Fundamental Research at Anand Rathi Shares & Stock Brokers. 'While a short adjustment window may exist, much of the impact appears partly priced in. The exact extent is unclear, making the scenario largely speculative."
Key Sectors Under Pressure
Automobiles, Electronics, Gems & Jewelry, Processed Foods
Krishan Arora, Partner at Grant Thornton Bharat, termed the move a 'defining moment" for Indian exporters and U.S.-India trade. 'The immediate impact could be sharp across autos, electronics, gems and jewelry, and processed foods. Persistent tariffs may dent India's GDP. Export-led MSMEs and manufacturing clusters face notable risks, and even large corporates will need to reassess supply chains and pricing strategies."
However, Kunal Shah, Senior Research Analyst at Carnelian Asset Management, offered nuance: not all sectors will suffer equally. 'Some Indian pharma and chemical firms could gain if US buyers pivot from China," he said.
Nirav Karkera of Fisdom added, 'IT is already grappling with macro headwinds and a demand slowdown—this news adds to its burden."
Top IT firms such as Infosys, HCL Tech, Tech Mahindra, and LTIMindtree—heavily exposed to US retail and manufacturing—may face higher pressure than more diversified players like Coforge, Mphasis, or Persistent Systems.
Pharmaceuticals
For now, Indian pharma exports are insulated from the tariff shock. 'Pharma formulations and APIs are currently excluded under the April 2025 tariff framework," said Maitri Sheth, Pharma Analyst at Choice Broking.
Still, a pending Section 232 investigation into pharma imports creates an overhang. Trump has hinted at future tariffs of up to 200% on generics, unless firms relocate manufacturing to the US within 12–18 months.
Analysts believe such extreme duties are unlikely to materialize due to their potential to spike US healthcare costs. India supplies ~45% of US generics and 10–15% of biosimilars.
Best-positioned: Cipla and Piramal Pharma (strong US manufacturing presence). Sun Pharma has already indicated it may pass on any new costs to US buyers.
Auto Components
Indian auto component manufacturers remain vulnerable, despite auto parts being largely exempt under Section 232. 'Export-oriented players like Samvardhana Motherson, Bharat Forge, and Bosch Ltd may feel the heat if demand slows or supply chains are disrupted," said Karkera.
Steel & Aluminium
These sectors are already under existing U.S. tariffs and are exempt from new duties. But global trade tensions could still influence demand and pricing. 'Steel and aluminium exporters, including Hindalco, Tata Steel, and JSW Steel, may see short-term volatility due to sentiment shifts," said Karkera.
Textiles
India's textile exports to the U.S. are modest in volume but remain sentiment-sensitive. 'Companies like Welspun India, KPR Mill, and Vardhman Textiles could see temporary selling pressure," Solanki said.
Energy & Oil
The energy sector is relatively insulated thanks to exemptions for petroleum and electricity-related imports. 'Listed firms like ONGC and Oil India should remain stable," said Solanki. 'But players like Nayara Energy, with more complex global exposure, could face indirect effects."
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Despite the tariff shock, most analysts agree that India's macro fundamentals remain strong.'India has a diversified export base and is less dependent on trade than most peers," said Karkera. 'We're inward-focused, and US trade is a smaller component compared to others in Asia."
Shah added, 'Strong liquidity, a rural rebound, and favorable monsoons support the domestic story. Tariff noise aside, the fundamentals are sound."
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New Delhi, India, India
First Published:
July 31, 2025, 08:32 IST
News business » markets Trump's 25% Tariff Shock: IT, Pharma, Steel Among Sectors Likely To Be Hit
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