Trump's 25% Tariff shock shakes D-Street today; pharma among top 5 vulnerable sectors

The US administration’s sudden announcement of a 25% tariff on all Indian imports starting August 1 is expected to inject volatility across several export-driven sectors—particularly those with substantial exposure to the American market, according to analysts.

Adding to the uncertainty is the lack of clarity around an additional penalty linked to India’s arms and energy imports from Russia, which remains undefined at this point.

“From a technical standpoint, this move could weigh on near-term export competitiveness and trigger currency volatility if sentiment deteriorates,” said Feroze Azeez, Joint CEO of Anand Rathi Wealth.


“The Indian market is currently being driven largely by domestic investors, and FIIs are almost 85% short. Therefore, a major sell-off is not expected. Some volatility is likely, any dips will be buying opportunities for investors with even 2-3 year time frames as we have already had a 10-month time correction,” he added.

Sectoral Impact Overview

Here’s a breakdown of the sectors that may react to the newly imposed tariffs:

1. Pharmaceuticals

The ongoing Section 232 investigation into pharmaceutical imports presents a medium-term overhang for the sector, with the possibility of additional pharma-specific tariffs in the pipeline.

“In the absence of clarity on the potential rate and scope of such tariffs, it remains difficult to quantify the impact on Indian pharma players at this stage,”

said Maitri Sheth, Equity Research Analyst at Choice Broking.

Industrials, Cables & Wires

According to a note by domestic brokerage firm Nuvama, the direct impact of the tariffs is likely to be felt in sectors where the US sets the marginal price—such as select industrials, cables & wires, and tiles.

2. Steel & Aluminium

Steel and aluminium products already under Section 232 tariffs are excluded from the new reciprocal duties. However, the sector could still feel the heat from global pricing pressures and demand fluctuations.

“India, by contrast, expected its labour-intensive industries to be tariffed lower than other Asian competitors and wanted a reprieve from Section 232 tariffs on sectors such as steel, aluminum, and copper,” noted Nomura in its report.

Also read: Trump’s tariffs threaten to deepen $248 billion India stock rout

3. Auto

While automobiles and auto parts are mostly exempt under Section 232 provisions, Indian auto component manufacturers remain vulnerable to shifts in U.S. demand cycles.

“Sectors under ongoing Section 232 investigation (pharmaceuticals, semiconductors & electronics, among others) are currently exempt from reciprocal tariffs, while existing Section 232 tariffs will apply on steel & aluminum (50%) and autos – finished and parts (25%),” analysts at Nomura said.

4. Textiles

India's textile exports to the U.S. are relatively small on the global stage, but the sector is highly sentiment-sensitive. Companies with significant U.S. exposure could face short-term selling pressure.

“The US is India’s largest export destination, accounting for ~18% of total exports and ~2.2% of GDP. These industries form the backbone of India’s manufacturing sector and have some of the largest formal sector employers, especially labour-intensive industries such as gems and textiles.”

Nomura added, underlining the critical link between exports and industrial growth.

5. Energy

President Trump’s announcement included a 25% tariff on Indian imports from August 1, along with an unspecified ‘additional penalty’ for India's continued energy and military purchases from Russia. This follows the earlier 26% reciprocal tariff imposed on India on April 2.

In a post on Truth Social, Mr. Trump reaffirmed ties with India but emphasized his concerns:

Mr. Trump called India a friend, but cited India’s high tariffs, nonmonetary trade barriers, the purchase of Russia’s military equipment and Russian energy as the reasons for imposing the 25% tariffs plus penalty.

This reflects broader geopolitical concerns over India’s dependence on Russia, beyond just tariff-related issues.

Analysts warn that elevated tariffs, combined with increasing pressure to scale back Russian energy imports, could further weigh on net exports and dampen overall growth momentum.

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