Stocks & Sectors to keep on radar after increase of Tariff rates

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 President Donald Trump's recent implementation of reciprocal tariffs has introduced significant changes to the trade dynamics between the United States and India. These tariffs encompass a baseline 10% import tax on all goods, with certain sectors and countries facing higher rates. Specifically, India is subject to an additional 27% tariff on its exports to the U.S., resulting in a cumulative tariff rate of 37% on Indian goods. These tariff increases are poised to challenge various Indian industries by elevating costs and reducing competitiveness in the U.S. market. The broader implications may include shifts in trade patterns, potential job losses, and the need for Indian exporters to explore alternative markets or adjust their strategies to mitigate the impact.

Sector wise impact of tariff on Indian economy:

Tariff Impact on India Gems and Jewellery Sector:

Tariff Increase: From approximately 2.12% to 13.32%, marking an 11.2 percentage point rise.

The U.S., accounting for $10 billion (30.4%) of India's $32 billion gem and jewellery exports in 2023/24, is a crucial market. The increased tariffs are expected to significantly reduce demand, potentially leading to job losses and business closures within India's diamond polishing industry.

The impact of these tariffs varies across different Indian sectors:

Tariff impact on Agriculture sector : Seafood, Meat, and Sugar

Tariff Increase: An additional 27.83% on products like fish, meat, and processed seafood.

The U.S. is a major destination for Indian shrimp and other seafood products. The heightened tariffs could make these products less competitive, potentially reducing market share and impacting revenues.

Tariff Increase in Processed Food, Sugar, and Cocoa:

 An additional 24.99%.  Indian snacks and confectionery will become more expensive in the U.S. market, likely leading to decreased demand.

Impact of Tariff Increase on Alcohol, Wines, and Spirits:

 A substantial 122.10% hike. ​ Although exports in this category are relatively modest at $19.20 million, the steep tariff increase could severely limit market access and growth potential in the U.S.​

Impact of Tariff Increased on Dairy Products:

 An additional 38.23%. Products such as ghee, butter, and milk powder will face higher prices, potentially reducing their competitiveness and market share in the U.S.

Impact of Tariff Increased in Footwear sector:

An additional 15.56%. With exports worth $457.66 million, the increased tariffs could make Indian footwear significantly more expensive, impacting sales and market presence in the U.S.

 Impact of Tariff Increase on Textiles and Apparel:

India exported approximately $9.6 billion worth of textiles and apparel to the U.S. in FY 2023-24, representing 28% of its total exports in this category. Increased tariffs could erode competitiveness, leading to reduced exports and potential job losses.​

Impact of tariff increase on Steel and Aluminium sector:

Steel faces a 25 percentage point increase, while aluminium sees a 10 percentage point hike. Impact: These significant tariff increases will make Indian steel and aluminium more expensive in the U.S. market, potentially reducing demand and affecting related industries.

Impact of tariff increase on Auto Parts and Accessories sector:

Tariff Increase: Specific figures are not detailed, but the sector is among those affected by the removal of GSP benefits.  India exports nearly 30% of its total auto parts and accessories to the U.S., amounting to $2.12 billion in FY24. Increased tariffs could reduce competitiveness and market share in the U.S.​

What should Investors do after Increasing Tariff rates by Donald trump?

Investment Insight:

Short-term strategy: Avoid export-heavy sectors like textiles, jewelry, seafood, auto parts.

Long-term strategy:

Look at import substitution, domestic consumption-driven sectors.

What are the benefits, drawbacks & Actions,  we can see in the coming weeks after tariff Rate Increased?

·  India-US trade tensions would not just be about tariffs, but broader policy measures, including visas (H1B), tech transfer, and investment norms.

·   India may retaliate, leading to a tit-for-tat trade war scenario, which generally hurts global markets.

·   Global investors might prefer China+1 plays, benefiting some Indian manufacturing sectors in the medium term.

·   India's response: Will it negotiate, retaliate, or absorb?

·   Global market reaction: Broader trade wars will affect emerging markets collectively.

·   INR/USD movement and crude oil prices, which impact inflation and interest rate outlook in India. A weaker rupee may partially offset export losses.

 

 Sector-Wise Impact of tariff in India: Major Negatively Affected Sectors by tariff

IT & Services (Infosys, TCS, Wipro):

Tariffs or visa restrictions may target outsourcing and offshoring. Increased cost of doing business in the US.      Sensitive to visa & outsourcing policies, not tariffs per se

Profit margins could be under pressure if more local hiring is mandated.

Pharmaceuticals (Sun Pharma, Dr. Reddy's):

India exports a significant portion of generic drugs to the US.

Tariffs could increase the cost for Indian pharma firms, reducing competitiveness.

Regulatory scrutiny could also rise under a protectionist policy.

Tariff Impact on Indian Textiles & Apparel sector:

India’s textile exports to the US are substantial.

Tariffs would make Indian garments less competitive against countries with favorable trade terms (like Bangladesh or Vietnam).

Relatively Insulated or Benefited Sectors

Domestic-Focused Sectors:

FMCG, retail, telecom, banking, and infrastructure might be relatively unaffected as they are less reliant on exports.

Import-Substitution Sectors:

Capital goods or chemicals could see long-term benefits if India pushes to develop self-reliant supply chains.

Agri-based Exports (with caution):

Spices, tea, or rice might not be directly hit, unless Trump targets a broader set of goods. But a trade war climate may bring more scrutiny.

Which Stocks & Sectors will have Negative Impact of Tariff Hike by Donald trump?

 

Sector	Tariff Increase (%)	Major Indian Companies	Likely Stock Market Impact
Gems & Jewellery	+11.2% (from 2.12% to 13.32%)	Titan, Kalyan Jewellers, Rajesh Exports, Vaibhav Global	Export revenues hit; reduced U.S. demand
Seafood & Meat	+27.83%	Avanti Feeds, Apex Frozen Foods, Waterbase Ltd	Shrinking margins, lower exports to U.S.
Processed Food	+24.99%	Nestlé India, Britannia, ITC, Haldiram (unlisted)	Higher landed cost → demand drops
Alcohol/Wines	+122.10%	United Spirits, Radico Khaitan, United Breweries	Minor impact due to low U.S. exposure
Dairy Products	+38.23%	Hatsun Agro, Heritage Foods, Parag Milk Foods	Reduced competitiveness abroad
Footwear	+15.56%	Relaxo, Bata India, Liberty Shoes	May lose price edge in U.S. market
Textiles & Apparel	Very less hike	Arvind, Vardhman Textiles, Welspun, Raymond, VTL	Export-heavy firms may suffer
Steel	+25%	Tata Steel, JSW Steel, SAIL	Exports to U.S. dip; domestic demand cushions impact
Aluminum	+10%	Hindalco, NALCO, Vedanta	Margins squeezed due to lower U.S. exports
Auto Components	Less Hike	Bharat Forge, Motherson Sumi, Bosch, Sundaram Fasteners	30% exports to U.S. at risk

 

​Companies will have Neutral to Positive Impact after tariff Hike by Donald trump.

Sectors	Companies	Impact of tariff Hike
FMCG	Hindustan Unilever, Dabur, Marico	Low export exposure; domestic demand
Telecom	Airtel, Jio (Reliance), Vodafone Idea	Insulated from trade shocks
Banking/Finance	HDFC Bank, ICICI, SBI	Domestic focused; not affected by tariffs
Capital Goods	L&T, Siemens India, ABB	Long-term shift towards self-reliance