Trump’s 25% Tariff Shock: Key sectors, stocks likely to be impacted

It is shocking news to India. His tone and used language is a bit objectionable. With the US administration’s surprise announcement of 25% tariffs on all Indian imports starting August 1, analysts expect targeted volatility across key export-oriented sectors—especially those with material exposure to the US.

“Sentimentally, the announcement is viewed as negative,” said Narendra Solanki, Head of Fundamental Research-Investment Services · Anand Rathi Shares and Stock Brokers . “While there may still be a short adjustment window, much of the impact appears partly priced in. The specifics around percentage impact are still unclear… making it largely speculative,” he added.

In a similar context, Vipul Bhowar, Senior Director & Head of Equities - Listed Investments at Waterfield Advisors, said the US represents around 20% of India’s total exports (~$87 billion in FY25), and the new tariff regime could challenge GDP forecasts, equity flows, and trade balances.

“Previously, the average tariff on India was around 3%, which now sees a significant increase to 25% or more. Sustaining such a tariff could place India at a comparative disadvantage with respect to trade agreements with countries like Vietnam and the Philippines,” he warned.

“The 25% tariff could challenge Indian equities, particularly in sectors with a high export ratio to the US, and may influence foreign capital inflows and the USD-INR exchange rate. This situation may also prompt renewed trade dialogue between India and the US,” he added.

Information Technology

Recently, TCS handed over 12000 pink slips to its employees.

India’s IT services sector, a traditional export engine, may not be directly affected by tariffs—but is already facing macroeconomic drag from the U.S. slowdown. Experts warn of a potential hit to discretionary tech spending by American firms.

“While the Indian IT services sector isn’t directly hit by the newly announced 25 percent US tariffs, the ripple effects could be substantial,” said Nitin Bhatt, Technology Sector Leader at EY India. “Rising input costs may prompt US companies to scale back discretionary tech spending.”

Nirav Karkera, Head of Research at Fisdom, says, “IT ranks at the top of the list… it is facing its own set of macro challenges, slowdown and demand really softening and whatnot. And this comes in as yet another blow to the sector.”

(Source: Money Control.com)

Pharmaceuticals

Pharmaceuticals may be insulated from immediate tariff shocks, but concerns linger about future policy changes.

“Pharmaceutical formulations and APIs are currently excluded from this tariff, consistent with the April 2025 reciprocal tariff framework,” clarified Maitri Sheth, Pharma Analyst at Choice Broking. However, she flagged an ongoing Section 232 investigation into pharma imports as a medium-term overhang. “The structural dependence on Indian pharma and cost sensitivity of the U.S. healthcare system provide a strong case against aggressive tariff action on the sector,” she added.

Trump had earlier said pharmaceutical manufacturers would get a 12–18 month window to shift production to the U.S., after which they could face tariffs “as high as 200 percent.”

Experts believe such high duties on generics are unlikely to stick, as they would push U.S. healthcare costs sharply higher. India currently supplies around 45% of U.S. generics and 10–15% of biosimilars by volume, according to Kotak Institutional Equities.

Cipla, Piramal Pharma and Sun Pharma will be affected drastically.

Auto Components

While automobiles and auto parts are largely exempt under Section 232 provisions, Indian auto component makers remain vulnerable due to their exposure to U.S. demand cycles.

“Auto component… especially the ones that are export-oriented… will remain sensitive,” said Karkera. Firms such as Samvardhana Motherson International, Bharat Forge, and Bosch Ltd generate a substantial portion of revenue from exports to North America and may be impacted if there’s a demand slowdown or supply chain disruption.

Steel & Aluminium

Steel and aluminium products already covered by Section 232 tariffs are excluded from the new reciprocal duties. However, global pricing and demand pressures could still influence the sector’s performance. “There’s also steel, aluminium… especially the ones that are export-oriented and have a fair share of revenue coming in through the US. So these segments will remain sensitive,” Karkera added.

Despite the exemption, stocks like Hindalco Industries, Tata Steel, and JSW Steel may see near-term volatility driven by broader trade tension sentiment.

(Source: MoneyControl.com)

Auto Components

While automobiles and auto parts are largely exempt under Section 232 provisions, Indian auto component makers remain vulnerable due to their exposure to U.S. demand cycles.

“Auto component… especially the ones that are export-oriented… will remain sensitive,” said Karkera. Firms such as Samvardhana Motherson International, Bharat Forge, and Bosch Ltd generate a substantial portion of revenue from exports to North America and may be impacted if there’s a demand slowdown or supply chain disruption.

Steel & Aluminium

Steel and aluminium products already covered by Section 232 tariffs are excluded from the new reciprocal duties. However, global pricing and demand pressures could still influence the sector’s performance. “There’s also steel, aluminium… especially the ones that are export-oriented and have a fair share of revenue coming in through the US. So these segments will remain sensitive,” Karkera added.

Despite the exemption, stocks like Hindalco Industries, Tata Steel, and JSW Steel may see near-term volatility driven by broader trade tension sentiment.

(Source: Money control.com)