Brokerages size up US's trade punch: Tariff impact seen as limited

Donald Trump’s 25% tariff on Indian goods rattled markets, with the BSE Sensex dropping nearly 800 points intraday before staging a smart recovery. Brokerages are hopeful that the final tariff may land lower — 15–20% — as both nations continue to negotiate a solution. Here’s how brokerages are reading the situation: 

Goldman Sachs 

·         A 25% tariff, if enforced, would moderately dent earnings due to India’s low export exposure

 

·         Only 2% of MSCI India’s total revenues come from goods exports

 

·         Every 5-percentage point increase in US tariffs could shave 80 basis points off MSCI India earnings per share (EPS)

 

·         If fully imposed, the new tariffs could lead to a 2% EPS hit

 

·         No change in EPS growth forecast: 12% for 2025 and 14% for 2026

 

·         Indian equities have underperformed emerging market peers by 15 percentage points year-to-date; underperformance may continue short term

 

Nomura

 

·         The 25% tariff is likely temporary; a final rate in the 15–20% range is more probable

 

·         A US trade delegation is expected in India by end-August

 

·         India remains a long-term beneficiary of the China+1 shift

 

·         Higher US tariffs pose downside risk to RBI’s 2025-26 GDP growth target of 6.5%

 

·         RBI’s rate-cutting cycle isn’t over: Nomura expects 25-basis point cuts in October and December, ending 2025 at 5%

 

·         Risks are tilted towards deeper rate cuts

 

Bernstein

 

·         Services remain untouched for now, sparing India a deeper macro hit

 

·         India trails in global trade deals; UK, EU, Japan, and Indonesia have more favourable terms

 

·         Vietnam’s effective tariff is 20%; India looks less attractive in the trade pecking order

 

·         If China settles at a 34% tariff, the India-China spread shrinks, weakening India’s China+1 advantage

 

Angel One

 

·         Export-oriented stocks may underperform near term

 

·         Investor sentiment likely to remain cautious until trade talks improve

 

·         Foreign portfolio investors may adopt a wait-and-watch stance or pivot to sector rotation

 

·         Expect a shift in investor focus towards domestic growth themes: consumption, infrastructure, and financials

 

PL Capital

 

·         The tariff move goes beyond trade: it’s deeply geopolitical, tied to post–Operation Sindoor tensions

 

·         Possible retaliation for India’s defence pivot away from the US

 

·         Viewed as a bullying tactic the US has used on countries like Canada

 

·         Increased near-term uncertainty and volatility expected

 

·         Export-heavy firms may see higher volatility; defensives like domestic consumption, healthcare, infrastructure, capital goods, asset management companies, and private banks could provide a defensive hedge

 

Barclays

 

·         The 25% tariff is unlikely to impact GDP growth meaningfully; estimated impact around 30 basis points

 

·         Short-term pressure on markets expected to persist

 

·         The rupee looks oversold; February high near 88 remains a strong resistance