Trump tariffs on India: From today onwards, India will now face 50 per cent tariff on Indian goods exported to the US. With trade negotiations between the Donald Trump administration and India remaining at an impasse, the government is exploring various measures to mitigate the impact of these punitive tariffs.
The levy will affect $48.2 billion worth of exports to the US and came into force at 9:30 AM on Wednesday.
“The duties…are effective with respect to products of India that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am Eastern Daylight Time on August 27,” the US Department of Homeland Security said in a draft order.
India and the US are in ongoing talks over a bilateral trade agreement (BTA). The US delegation’s scheduled visit to India on August 25 has been postponed. Meanwhile, starting August 7, the US imposed a 25 per cent reciprocal tariff on select Indian imports.
Sectors that will witness an impact from Trump’s tariffs
Sugandha Sachdeva- Founder-SS WealthStreet, said that U.S. President Trump has already imposed a 25 per cent tariff on a range of Indian goods and, in what is widely viewed as retaliation for India’s continued purchase of Russian crude, an additional 25 per cent tariff is now being levied. This effectively raises the duty on many Indian exports to 50 per cent, posing a severe threat to trade flows and corporate earnings.
Export-oriented sectors are at the forefront of this pressure:
• Textiles & Apparel, Gems & Jewellery, Pharmaceuticals, Auto Components – together, these sectors ship nearly one-third of their output to the U.S. and face a direct hit to margins and competitiveness.
• IT services and Leather Goods are also expected to feel the strain of higher levies and reduced demand.
On the other hand, domestically oriented sectors such as banking, hospitality, FMCG, and cement could provide relative resilience, as their growth drivers are primarily local rather than global.
Trump tariffs impact on Indian stock market
Meanwhile, looking at the market sentiments, experts believe that the Indian stock market has a history of rebounding from tariff-driven dips.
“Historically, Trump’s tariff threats have often ended with delays or reversals closer to the deadline, with markets rebounding after initial sell-offs. I believe investors will likely choose to buy the dip as most of the tariff aftereffects have already been discounted in prices. From the current levels, the downside appears sentimentally limited, though volatility is expected to persist in line with Trump’s updates,” said Prashanth Tapse, Sr VP Research Analyst at Mehta Equities Ltd.
What should investors do amid Trump’s tariffs on India?
According to Prashant Tapse of Mehta Equities, investors should focus more on sectors that are relatively insulated such as FMCG, telecom, banking, and insurance.
“There is no need to panic on “the day” as the Indian government is well prepared to support the economy through GST 2.0 reforms and potential future interest rate actions, which can help offset the impact of Trump’s tariff measures on the local economy,” Tapse said.
Whereas, Santosh Meena, Head of Research at Swastika Investmart, believes that India’s domestic economic fundamentals are robust, driven by a strategic emphasis on domestic consumption.
“This provides a strong counter-narrative to global headwinds. Consequently, investors should resist panic and instead allocate capital to domestically-oriented sectors such as FMCG, Automobiles, Power, and Infrastructure. Earning momentum is expected to accelerate in the coming quarters. Nevertheless, the ongoing global uncertainty underscores the importance of a well-diversified investment portfolio to mitigate risk,” Meena said.
On the other hand, Sugandha Sachdeva of SS WealthStreet said that expectations of a rate cut by the U.S. Federal Reserve in September could lead to renewed foreign inflows into Indian assets. The RBI may also consider another 25-bps cut in its upcoming meeting to support credit growth and domestic demand.
“As for the key levels, the benchmark Index Nifty has key support at the 24650 mark, from where we might see recovery. However, a break of the same may accentuate selling pressure towards 24180 mark. On the higher side, 25250 remains a crucial resistance in the near-term,” Sachdeva added.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
