Top 5 Key Sectors That May Be Affected by Trump’s 25% Tariff on India

Investor sentiment turned cautious ahead of Thursday’s market session following U.S. President Donald Trump’s announcement of a 25 per cent tariff on Indian imports. The Sensex and Nifty 50 both opened lower in response, with Nifty 50 down 0.26 per cent at 24,791.45 and the Sensex falling 0.28 per cent to 81,259.37 as of 11:40 a.m. IST. Earlier in the day, both indices had declined nearly 0.9 per cent amid rising concerns over export-dependent sectors.

Trade and Export Exposure

The United States accounts for close to 20 per cent of India’s total exports. For FY25, India’s exports reached a record high of USD 824.9 billion. The tariff hike, from an average of 3 per cent to 25 per cent, could reduce the global competitiveness of Indian goods. Comparatively, countries like Vietnam and the Philippines enjoy more favourable trade terms with the U.S., potentially putting Indian exporters at a disadvantage.

IT Sector

The Information Technology sector, while not directly impacted by the tariff, could see an indirect effect. U.S.-based clients may cut discretionary spending, impacting revenues of companies such as Infosys, HCL Technologies, Tech Mahindra, and LTIMindtree. These Large-Cap firms have high exposure to American retail and manufacturing sectors. In contrast, Mid-Cap players like Coforge, Persistent Systems, and Mphasis, with a more diversified client base, may manage the headwinds better.

Pharmaceuticals

Pharmaceutical products and APIs are currently exempt from the new tariff structure under the reciprocal tariff framework announced in April 2025. Indian pharmaceutical companies supply about 45 per cent of generics and 10–15 per cent of biosimilars to the U.S. Cipla and Piramal Pharma, with strong U.S. manufacturing bases, are likely to be insulated. Sun Pharma, in its earlier commentary, mentioned its ability to pass on costs to U.S. buyers, potentially protecting profit margins.

Auto Components

Indian auto part exports to the U.S. were valued at USD 2.2 billion in FY24, accounting for 29.1 per cent of total exports in this segment. The March 2025 U.S. announcement of 25 per cent tariffs on imported vehicles and parts has created challenges. Companies like Samvardhana Motherson International and Bharat Forge, which generate a significant portion of their revenues from the U.S., may face headwinds due to reduced demand and supply chain disruptions.

Steel and Aluminium

While steel and aluminium products remain under Section 232 tariffs and are excluded from the latest duties, the sector could still witness market volatility. Investor sentiment toward stocks like Hindalco Industries, Tata Steel, and JSW Steel may remain cautious due to the broader trade conflict and pricing concerns.

Textiles

India supplies nearly one-third of the U.S.'s textile and apparel imports. A 25 per cent tariff could weaken India’s position in high-margin categories such as fashion and speciality fabrics. Companies with large U.S. exposure like Welspun India, KPR Mill, and Vardhman Textiles saw their share prices fall by 3 to 6 per cent in early trading. Competing exporters from Bangladesh and Vietnam may capture market share in the coming quarters.

Oil Refineries

Indian refiners like Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Reliance Industries could see profit pressure. India imports 37 per cent of its oil from Russia at a discount, boosting refining margins. A tariff-related disruption or restrictions on Russian oil could drive up import costs. Reliance had committed to importing up to 500,000 barrels per day from Russia in 2025.

Disclaimer: The article is for informational purposes only and not investment advice.