Trade war fallout: Indian sectors at most risk from Trump’s tariffs

By Nishtha Awasthi, ETMarkets.com | Mar 07, 2025, 02:34:40 PM IST

Impact of Trump's Reciprocal Tariffs on Key Indian Sectors

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Impact of Trump's Reciprocal Tariffs on Key Indian Sectors

The imposition of reciprocal tariffs by the United States under Donald Trump’s presidency aims to counterbalance import duties imposed by trading partners like India. These tariffs could significantly disrupt India’s export-oriented industries. The sectors that are expected to face challenges include pharmaceuticals, automobiles, medical devices, textiles, and gems and jewellery.

While short-term volatility is expected, long-term structural adjustments could shape future trade policies. Negotiations between governments and alternative trade agreements may help cushion the impact in some areas. Here are the sectors that may be affected by these reciprocal tariffs:

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Automobiles Sector

The auto and auto ancillary sectors are particularly vulnerable to higher tariffs on exports to the US. As tariffs increase, pricing pressures could reduce competitiveness and slow down export growth.

Market expert Neeraj Dewan, in an ETNow discussion, addressed the growing fears in this sector, explaining, "Automobiles also there is a lot of fear about tariffs, that is mostly maybe happening more towards the auto ancillary part." Companies like Mahindra & Mahindra and Maruti are expected to be among the affected players. Despite the concerns, some market analysts believe that investors should focus on specific stocks rather than making broad sector-wide adjustments.

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Medical Devices Sector

Medical devices are another key export category that may face tariff-related disruptions. In an ETNow interview, Sandip Sabharwal of asksandipsabharwal.com highlighted the broader impact of tariffs on this sector, saying, "If you look at the composition of the exports, it is medical devices, pharmaceuticals, gems and jewellery, textiles, these are the sectors which will get most impacted." The increased cost of exports to the US could hurt revenue growth, forcing Indian firms to either absorb the additional costs or look for alternative export markets.

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Textiles Sector

The textile sector is a significant contributor to India's exports, and higher tariffs could lead to declining demand from US buyers. Sandip Sabharwal, speaking on ETNow, explained that this is one of the industries that will be affected the most, stating, "The tariff issue impacts few industries more significantly from India." While this could negatively impact export volumes.

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Gems & Jewellery Sector

The gems and jewellery sector is another industry that will feel the weight of tariffs. As discussed in an ETNow segment, Sandip Sabharwal remarked, "If you look at the composition of the exports, it is medical devices, pharmaceuticals, gems and jewellery, textiles, these are the sectors which will get most impacted." Higher duties could lead to a drop in demand from US buyers, squeezing margins for Indian exporters. The extent of the impact will depend on ongoing trade negotiations and potential tariff adjustments.

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Market Response & Investment Outlook

The uncertainty surrounding tariff policies has led to market volatility, with some sectors experiencing corrections. In a discussion on ETNow, Neeraj Dewan pointed out, "There is a lot of instability because of tariff talks." Given this volatility, investors are advised to focus on fundamentally strong companies that have diversified international exposure. While some industries may experience immediate downturns, others could adapt by shifting strategies and exploring alternative trade routes.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Trade war fallout: Indian sectors at most risk from Trump’s tariffs

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