Trump reciprocal tariff: Which Indian sectors will be impacted from April 2

From auto to tech: What sectors will be most impacted by Trump reciprocal tariffs that will go into effect on April 2

As US President Donald Trump’s reciprocal tariff deadline approached, Indian exporters are bracing for potential disruptions across multiple industries. The proposed tariffs come in response to what Trump has repeatedly called India’s ‘brutal’ tariff policies, arguing that India imposes disproportionately high duties on US products.

 

India-US trade relations

India currently levies a weighted average effective tariff of 9.5 per cent on US exports, compared to a 3 per cent tariff imposed by the US on Indian goods. The US remains India’s largest export destination, accounting for 18 per cent of total exports, which is equivalent to 2.2 per cent of India’s gross domestic product (GDP) in financial year 2023-24 (FY24). The India-US trade surplus touched a record high of nearly $38 billion in 2024, making the relationship crucial for Indian exporters.

   

Industry analysts highlight that the most affected Indian sectors will include information technology (IT), pharmaceuticals, automobiles, and key manufacturing industries.

 

Ruchi Mukhija of ICICI Securities and ICICIDirect says, “US government’s policy changes pertaining to tariffs have manifested in uncertainty over the last three weeks of the quarter. This may impact client decision making and dampen recovery in discretionary spends. Manufacturing (including auto), retail and CPG verticals may face the brunt.”

 

Tech and IT sector

Shares of major IT firms, including Infosys, Tata Consultancy Services (TCS), and Persistent Systems, witnessed a decline of up to 5 per cent in anticipation of the tariff announcement. Analysts suggest that if the tariffs are less severe than expected, there could be a market recovery, particularly in export-driven industries. 

Global Strategy Operations Lead at VT Markets Ross Maxwell said, “India is one of the primary markets that President Trump aims to target to align tariffs more evenly. The proposed measures could disrupt supply chains and increase the cost of goods and services as businesses pass on the additional costs to consumers.”

 

The impact on the stock market has been significant, with the NIFTY IT index declining by nearly 15 per cent this year. Market experts expect a cautious earnings season, particularly in sectors like manufacturing, retail, and consumer packaged goods, which could see a slowdown in discretionary spending due to the prevailing uncertainty.

 

Gems and jewellery

The jewellery sector faces one of the greatest risks, as the US represents 30 per cent of India’s jewellery exports. India currently imposes a 20 per cent tariff on gold jewellery imports, compared to the US import tariff of just 5.5-7 per cent. Similarly, cut and polished diamonds from India enjoy duty-free access to the US, but an increase in US tariffs could disrupt this trade flow.

 

Automobile sector

Trump has announced a blanket 25 per cent tariff on auto imports which will set in on Thursday. While India’s auto exports to the US, consisting of accessories and parts valued at $2.6 billion in 2023, are significant, analysts believe the sector is relatively insulated due to the nature of trade between the two nations. These tariffs are expected to expand to include auto parts in the coming weeks.

 

Pharmaceuticals

The pharmaceutical sector is a key exporter to the US, particularly in generic drug formulations. Analysts argue that while higher tariffs could impact pricing, the necessity of these generics in the US market may mitigate severe disruption. According to a report by CNBC-TV18, the pharma is most likely to be take a hit by Trump tariffs, in terms of exposure to the US generics market, are: Gland Pharma, Aurobindo, Aurobindo, Zydus Life, Lupin, Cipla, Sun Pharma, and Torrent Pharma, respectively.

Currently, the US does not impose any tariffs on pharma imports from India, while India has a 10 per cent tariff on US pharma imports.

 

Electronics and electrical machinery

India’s electronics sector, particularly smartphone exports, is at risk, with tariff increases expected to range from 1.2 per cent to as high as 10.8 per cent. Over 50 per cent of India’s electronics exports to the US consist of Apple iPhones assembled in India. An increase in duties could make these devices more expensive for US consumers, affecting demand.

 

Textiles and apparel sector

The US accounts for 28 per cent of India’s textile exports ($9.6 billion in FY24), therefore are likely to be impacted by Trump reciprocal tariffs.

 

Gold prices, crude oil impacts

Equity markets remain volatile as traders brace for the economic fallout of the tariffs. The Nifty index has been on a recovery path following a 16 per cent correction in the past five months, but analysts warn that volatility will persist in the short term.

 

“We expect the index to consolidate in the 23,800-22,800 range as markets adjust to the new tariff regime and upcoming earnings reports,” ICICI Securities and ICICIDirect noted.

 

In the commodities market, gold prices surged to a record high of $3,120 per ounce, reflecting increased safe-haven demand amid global trade tensions. Crude oil prices also spiked nearly 4 per cent following Trump’s warning of potential sanctions on Russian and Iranian exports.