Trump tariffs: How 27% 'reciprocal' import duty will affect Indian stock market, economy 

US President Donald Trump has imposed reciprocal import tariff of 27 per cent on India. On 'Liberation Day', Trump said New Delhi imposes 'very very tough' tariffs on US. 

"Their Prime Minister (Narendra Modi) just left (US recently)...he is a great friend of mine, but I said to him that 'you're a friend of mine, but you've not been treating us right'. India charges us 52 per cent, so we will charge them half of that," said Trump while announcing a fresh round of tariffs on Thursday. 
 
In reaction, Asian markets went deep into the red. Nikkei 225 plunged 1204 points to 34,521 and Hang Seng plunged 383 points to 22,818. Dow Jones futures plunged 845 points, indicating a red start for the US market at night. 

Sensex slipped 400 points to 76,221 and Nifty slipped 100 points to 23,232 in early deals today. 

Here's a look at what brokerages and analysts believe would be the impact of fresh US tariffs on the Indian stock market and economy.  
 
Brokerage Bernstein believes that India would navigate through the tariff challenges and is more likely to engage in negotiations with the US.

Citi said pharma sector has been excluded from tariffs announced by the Trump administration. Key stocks with higher revenue mix from the US are Aurobindo (48%), Zydus (47%) and Dr Reddy's (46%). 

Global brokerage CLSA said the pharma sector being exempt from US tariffs is a positive sign for Indian firms. Stocks with higher revenue mix are Aurobindo, Zydus & Dr Reddy's, it said asserting positive stance on these stocks. 

Jefferies expects a rally in US-focused generic pharma stocks. In India, Lupin, Dr. Reddy's, and Zydus shares are best placed post tariff hike.

Goldman Sachs said the total effective tariff in India will increase by 19.5% with announcements made so far. The global brokerage estimates a potential fall of $15 Bn In Indian exports (0.4% of India's GDP). The impact is not insignificant,  Goldman said adding that the short-term USDINR rates could rise. Goldman said it does not expect RBI to intervene aggressively to defend the currency. It believes that RBI has more room to cut policy rate.

 

Global brokerage HSBC said the tariffs announcement is likely to hit to India's GDP by 0.3-0.5%, but its impact on global growth has to be seen. India's services exports remain unaffected, a buffer which many other countries don't have, HSBC added. 

UBS referred reciprocal tariff of 27% higher than expected. This tariff is negotiable and takes effect from Apr 9, 2025. Extent of tariff is high and could render some exports unviable. Thus, tariff hike is a negative event for market. 

Kotak Securities said exemption for pharma goods is too early to rejoice. 

Uncertainty doesn’t end here, Kotak said adding that it would prevail even once pharma tariffs are announced. "Our base case stays that potentially high pharma tariffs are unlikely to sustain. Key question now is for how long will pharma be exempt," Kotak added. Now, focus will be on trade treaties and subsequent timing/extent of any rollback of tariffs. 
 

Pranay Aggarwal, Director & CEO, Stoxkart said the tariffs may lead to short-term volatility and advised investors to be cautious in market. 

"The US decision to impose reciprocal tariffs on India, Japan, and others may trigger short-term volatility in global markets, particularly in sectors like autos, steel, and agriculture. Indian equities could face pressure due to potential retaliatory measures, impacting export-driven sectors (e.g., pharmaceuticals, IT). The immediate tariff enforcement (excluding autos, effective April 3) suggests urgency, possibly disrupting supply chains. For India, heightened trade tensions may weaken the INR and deter FDI, though domestic stimulus could offset risks. Defensive stocks (FMCG, utilities) may outperform, while cyclical sectors (autos, metals) could underperform. Long-term implications hinge on negotiation outcomes, but near-term caution is advised," said Aggarwal. 

According to Arindam Mandal, Head of Global Equities at Marcellus Investment Managers, the announced tariffs are more severe than anticipated.

"While the market had expected the effective tariff rate to be in the high teens, the actual rates are now projected to be in the mid-to-high 20% range – possibly the highest we have seen in a century, a significant increase from the previous 2.5–5% levels. In the short term, these tariffs function as a tax on consumers, contributing to inflationary pressures. However, weaker demand might temper inflation and prevent interest rates from rising too sharply. Year-to-date (YTD), markets have been partially pricing in these risks, as evidenced by the outperformance of defensive sectors. This trend is likely to persist until potential earnings downgrades from these trade actions are fully reflected in the valuations of riskier assets and sectors," said Mandal.

On the technical outlook of market, Shrikant Chouhan, Head Equity Research, Kotak Securities said, "We believe that as long as the market is trading above 23150/76000, the pullback formation is likely to continue. On the upside, it could move up to 23500/77000. A dismissal of 23500/77000 could push the market towards 23650/77500. Conversely, if the market falls below 23150/76000, selling pressure may intensify, and it could slip to the 23000-22950/75500-75300 range."

Manish Jain, Chief Strategy Officer & Director, Mirae Asset Capital Markets said, "Given the significant increase in tariffs on major trade partners and expected retaliation by other countries, inflation will increase which will lead to the global economic slowdown. This will even increase the recession probability in the US. Also in an inflationary environment, the Fed might delay the rate cuts. Gold, Crypto and Bonds will gain traction while equity markets will remain volatile."