Trump’s Tariff Threat: 5 Indian Sectors That Could Face the Biggest Impact

With the possibility of Donald Trump returning to the White House, global markets are bracing for a new wave of protectionist trade policies. The Indian stock market has already reacted, with Sensex and Nifty falling nearly 2% due to concerns over increased US tariffs on Indian exports.

Experts warn that if harsh tariffs are imposed, several key Indian industries could suffer, leading to billions in losses and a slowdown in exports. However, if the tariffs are less severe than expected, markets could rebound.

Which Sectors Are at Risk?

1. Electronics: India’s Largest Export to the US Faces Uncertainty

• Exports to the US: $11.1 billion (FY24), 14% of India’s total exports to the US.

• US market share: 32% of India’s total electronics exports.

• Major risk: Tariff hikes may force companies like Apple to reconsider assembling iPhones in India.

• Estimated tariff impact: A regional tariff differential of 9% could hurt the industry.

2. Gems and Jewellery: A $9.9 Billion Industry at High Risk

• US market share: 30% of India’s total $33 billion jewellery exports.

• Key exports: Cut & polished diamonds, studded gold jewellery, lab-grown diamonds.

• Analysts warn: US buyers could shift to countries with Free Trade Agreements (FTAs), such as Singapore, UAE, and Oman, if tariffs rise significantly.

3. Pharmaceuticals: A Critical Industry Facing Moderate Impact

• India supplies 47% of US generic drug imports, making it hard to replace.

• Possible tariff range: Less than 10% (minimal impact), but above 10% could hit pharma stocks.

• Industry outlook: Most Indian pharma companies expect to pass tariff costs onto US buyers, limiting damage.

4. Automobiles & Auto Components: A Blow to Major Players

• US market share: 27% of India’s total auto component exports.

• Companies at risk:

  • Sona Comstar (43% revenue from North America).

  • Samvardhana Motherson (18% revenue from the US).

  • Tata Motors (Jaguar Land Rover - 30% of sales from the US).

• JLR concern: No manufacturing base in the US means higher tariffs could hurt profits.

5. Textiles & Apparel: 28% of Exports at Stake

• Exports to the US: $9.6 billion (FY24), 28% of total textile exports.

• Major competitors: Bangladesh and Vietnam may gain a cost advantage if Indian textiles become expensive.

• Biggest risk: Broad-based tariffs could severely impact the sector.

IT Sector: Indirect Risk from US Economic Slowdown

While tariffs won’t directly affect Indian IT firms, a US economic slowdown due to trade wars could reduce discretionary spending. This would shrink budgets for Indian IT service providers, potentially affecting companies like TCS, Infosys, and Wipro.

Market Reactions and Future Outlook

• Foreign investors (FIIs) are closely watching Trump’s tariff announcements.

• If tariffs are severe, export-driven sectors could face sharp declines.

• If a trade deal is reached, India’s diverse export base and a weakening rupee could help offset some losses.

Conclusion: The Indian government is working to negotiate a diplomatic solution, but a full-blown trade war could shake India’s export industry. The final impact will depend on the severity of tariffs and India's countermeasures.