Factbox: Trump tariffs threaten India's export edge; key sectors brace for impact

Navin Fluorine International

31/07/2025 08:49

By Vivek Kumar M and Bharath Rajeswaran

July 31 (Reuters) - U.S. President Donald Trump on Wednesday slapped 25% tariffs on Indian goods, along with an unspecified penalty tied to energy and defence purchases from Russia — a move that, if enforced, could erode India's export competitiveness and weigh on investor sentiment.

India's trade surplus with the U.S. — its largest export market — stood at 1.2% of GDP in 2024. Analysts warn halving that surplus could shave 25–40 basis points off GDP, undermining India's 'safe haven' narrative amid a global slowdown.

The relative appeal of Indian markets has also faded, with local equities underperforming peers like Vietnam and Indonesia, which have secured trade pacts with Washington.

CLSA said the tariff threat adds to uncertainty in an already expensive market.

With negotiations set to resume in mid-August, markets expect the final tariff rate to be lower than 25%. But until clarity emerges, export-linked sectors face significant near-term headwinds.

See below for a sector snapshot on who is exposed:

PHARMACEUTICALS

The U.S. accounts for nearly one-third of India's pharma exports (about $9 billion in FY24). Jefferies estimates a 2–8% EPS hit for Biocon BION.NS, Sun Pharma SUN.NS and Dr. Reddy's REDY.NS, if generics are included.

HSBC warns of an up to 17% downside to FY26 earnings forecasts.

TEXTILES

Exporters like Welspun Living WLSP.NS, Gokaldas Exports GOKL.NS, Indo Count ICNT.NS and Trident TRIE.NS derive 40–70% of sales from the U.S. Higher tariffs could shift market share to Vietnam, which benefits from lower U.S. duties.

OIL REFINING

A proposed penalty on Russian oil imports could hit Reliance Industries RELI.NS and state-run refiners Bharat Petroleum BPCL.NS and Hindustan Petroleum HPCL.NS. Companies may face higher costs if forced to diversify crude sourcing.

AUTO COMPONENTS

Automakers have limited U.S. exposure, but parts makers including Bharat Forge BFRG.NS and Sona BLW SONB.NS are vulnerable. Tata Motors' TAMO.NS Jaguar Land Rover unit is shielded under U.S.-UK/EU trade arrangements.

CAPITAL GOODS & CHEMICALS

Cummins India CUMM.NS, Thermax THMX.NS and KEI Industries KEIN.NS have 5–15% U.S. exposure.

Chemical exporters such as Navin Fluorine NAFL.NS, PI Industries PIIL.NS and SRF SRFL.NS may face margin pressure, especially on refrigerant gas exports.

SOLAR EQUIPMENT

Waaree Energies WAAN.NS and Premier Energies PEME.NS count the U.S. as a key market. Nearly 20% of Waaree's FY24 revenue came from the U.S., which also accounts for a major chunk of its 59% overseas current order book.

Potential impact on Indian companies due to U.S. tariffs https://reut.rs/3GSqLoK

 (Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sonia Cheema)

 ((VivekKumar.M@thomsonreuters.com;))