Trump Tariffs: India's pharma, auto, textile sector to be in focus; here's why
On Monday, July 7, US President Donald Trump disclosed letters his administration sent to different trading partners notifying them of the reciprocal tariff rates that will be in effect starting August 1, 2025.
The first two letters shared by Trump on the social media platform Truth Social indicated that the US will apply a 25% tariff on Japan and South Korea. After a brief pause, the US President also released tariff letters for additional countries including Myanmar, Laos, Thailand, South Africa, Bangladesh, Kazakhstan, Indonesia, Tunisia, Malaysia, Serbia, Cambodia, and Bosnia & Herzegovina.
On Monday, Trump announced proposals for a 40% tariff on products imported from Myanmar and Laos, a 36% tariff on goods from Thailand and Cambodia, a 35% tariff on items from Serbia and Bangladesh, a 32% tariff on imports from Indonesia, a 30% tariff on products from South Africa, and a 25% tariff on goods from Malaysia and Tunisia.
On Sunday, July 6, Trump announced that he might send out as many as 15 initial letters, warning that US import taxes would return to the higher rates implemented in April if countries fail to reach agreements.
On Monday, President Donald Trump announced that the United States is nearing a trade agreement with India. Amidst this backdrop, experts highlight the potential impact that different sectors may experience in India as a result tariffs.
Mohit Gulati, the CIO and managing partner of ITI Growth Opportunities Fund, said that, in sectors where India enjoys a near-monopoly or dominant market share—such as certain generics in pharmaceuticals and specialized textiles—India will be in a strong position to dictate terms to US buyers, leveraging its indispensability and global supply chain strength. For these monopolistic exports, the US will have limited alternatives, giving Indian exporters greater pricing and negotiation power.
Gulati highlighted that for the broader range of exports, however, the scenario is more nuanced. Key sectors like gems & jewellery, electronics, textiles, and auto components will face both opportunities and challenges as tariffs rise. While some Indian exporters may benefit from rivals like China and Vietnam being hit with even steeper duties, others could see margins squeezed and competitiveness tested. There will be pluses and minuses across the board, with the final impact depending on sectoral dynamics, government support, and the evolving terms of the India-US trade deal.
"Ultimately, India's ability to capitalize on its strengths while navigating new tariff barriers will define its export trajectory in the post-tariff pause era,' said Mohit Gulati.
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