1 month ago
Last Updated:April 02, 2025, 16:53 IST
A report released by CareEdge Ratings highlighted concerns about Trump's tariffs affecting overall market sentiment.
US President Donald Trump holds a signed executive order in the Oval Office of the White House, in Washington, US. (IMAGE: REUTERS)
US President Donald Trump’s new tariffs, set to begin on April 2, could have a $3.1 billion net impact on India’s exports to the North American country due to reciprocal tariffs, according to a new CareEdge Ratings report accessed by news outlet MoneyControl.
Smita Rajpurkar from CareEdge Ratings said that while Trump’s tariffs will have a direct impact of just 0.1% ($3.1 billion) on India’s GDP, there are bigger concerns about how they might affect overall market sentiment.
She shared these insights while presenting the report in Mumbai on Monday.
What Will Be The Rate Of Tariffs Imposed On India
The government has introduced sectoral tariffs, including a 25% tariff on all steel and aluminium imports and a 25% tariff on automobiles and certain automobile parts. Other industries like semiconductors and pharmaceuticals are also under consideration.
With total trade exports at $78 billion, the US is India’s largest export destination, making up 18% of outbound trade.
India imposes higher tariffs on US imports, with an average tariff rate of around 11%, compared to the US tariff rate of about 3% on Indian imports, the report said.
“We have thus made a simplistic assumption that the US will impose an additional 8 percent tariff on all imports from India. We have also made an assumption of some rupee depreciation at 4 percent based on last year’s actuals, which would offset part of the impact of the higher tariffs, and have further assumed that the price elasticity of demand for India’s exports to the US is 1," Rajpurkar was quoted as saying by MoneyControl.
How Will It Impact Stock Markets
Stock markets recovered on Wednesday with benchmark Sensex closing higher by nearly 593 points on strong macro data and value buying by investors after recent free-fall ahead of US tariff announcements.
Value buying in select auto, banking and IT shares, and India’s manufacturing sector growth rising to an eight-month high in March powered the recovery in the domestic stock markets. Sensex had tanked 1,390 points or 1.80 per cent and Nifty plunged by 353 points on Tuesday due to FII selling ahead of US tariff announcements on Wednesday.
Which Sectors Will Get Impacted
In the agricultural sector, the hardest-hit segment is expected to be seafood. A report by the Economic Times said that particularly shrimp could be affected as it already faces antidumping and countervailing duties in the US.
“Already our exports have antidumping and countervailing duties in the US. The additional hike in tariffs will make us uncompetitive. Out of India’s total shrimp exports, we ship 40 per cent to America," Yogesh Gupta, MD of Kolkata-based seafood exporter Megaa Moda was quoted as saying by news agency PTI.
GTRI Founder Ajay Srivastava told the Economic Times that processed food, sugar and cocoa exports which are valued at $1.03 billion could also struggle under a 24.99% tariff gap. He further added that ghee, butter and milk powder, could be “severely" impacted by a 38.23% tariff differential.
A 13.32% duty hike on India’s $11.88 billion diamonds, gold, and silver exports may raise jewellery prices in the US and reduce competitiveness.
Electronic gadgets could be facing the same fate. The electronics and telecom sector exported goods worth $14.39 billion in 2024 and faces a 7.24% tariff gap. Mobile phones, laptops, and other electronic devices might become less competitive in the US market, the Economic Times report said.
Location : First Published:April 02, 2025, 16:53 IST
News business Donald Trump's Tariffs Keep Global Markets On Edge. What's At Stake For India?
