Which Sectors Are Most Affected By Trump Tariffs? Find Out
The Trump Tariffs' Impact on the Indian Sector, from auto to IT, all the major exporting companies face challenges.
The Donald Trump administration announced the tariffs on April 2, affecting over 180 countries. In this long list of countries, India stood right after China on the list. The Trump govt. has imposed 26 per cent tariffs on imports from India. This tariff is higher than those imposed in the European Union (20 per cent), Japan (24 per cent), and South Korea (25 per cent). There is a 54 per cent tariff on China, this tariff clearly shows the staggering trade relations between the US and China.
Also, for India, the key industries face setbacks in exporting.
Trade Tariffs: Key Sectors That Will Face The Most Impact
Pharma Industry
The pharmaceutical sector has limited exposure to the imposed tariffs. The industry had factored in a 10 per cent tariff.
According to the Jefferies brokerage, Indian drug exporters will enjoy relief. As a result, there is a rally in US generic pharma stock. All the Indian pharma giants in the US market have significant revenue exposure. From ‘Syngene’ to ‘Alkem’, all companies will benefit from this relief.
IT and Tech services
Although there may not be a direct impact on IT services but the increased odds of a US recession are likely to affect everything.
This may affect the IT sector too. According to the Jefferies brokerage, the slow US GDP growth will lead to slow demand, especially in manufacturing, logistics, and retail.
Auto Industry
“A blanket tariff of 26 per cent is expected to impact demand and also the competitiveness of Indian automobile exports in the American market, which can have a cascading effect in terms of higher production costs, layoffs and supply chain challenges”, Macquarie Group said, as reported by multiple publications. The Indian auto and auto parts industry has already been facing 25 per cent tariff since March. This is not new for this industry.
But the auto industry contributes 3 per cent of Indian exports. Industry faces challenges in maintaining trade.
Manufacturing, Textile & General Exports
The US is one of the biggest markets for Indian textile and apparel exporters, and is worst hit by the tariffs. India’s other top exported items to the US are machinery (15.6 per cent), gems and jewelry (11.5 per cent), machinery for nuclear reactors (8.1 per cent), and refined petroleum products (5.5 per cent). Higher tariffs will adverse the trade of these goods.
The companies which have significant US revenue exposure will be affected the most, and lowest exposure will sustain in long-term trade, but India’s exports contribute only 1.1 per cent of India’s GDP.
So the effect of tariffs on India’s economy is significantly lower than compared of other global economies.
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