What Are Reciprocal Tariffs, How Can They Impact India, Its US Exports? All You Need To Know
Donald Trump’s announcement of reciprocal tariffs has introduced significant volatility to the Indian stock market. Key impacts include:
Sectoral Risks: Industries like automobiles, pharmaceuticals, textiles, and steel are particularly vulnerable. These sectors face challenges due to increased tariffs on exports to the U.S., which could reduce their competitiveness
Market Performance: The Nifty index has already seen a decline of around 14% from its peak, with small-cap stocks entering bear market territory. Foreign Institutional Investors (FIIs) have pulled out over $15 billion from Indian equities in 2025 alone
Currency Pressure: The Indian Rupee has weakened against the U.S. Dollar, reflecting concerns about a potential economic slowdown
Investor Sentiment: Despite the challenges, some experts view the current market dip as an investment opportunity, citing India’s long-term growth potential and demographic advantages
India is adopting a diplomatic approach to mitigate these risks, including exploring tariff rationalization and encouraging foreign investments
Goldman Sachs identified three potential impacts of these tariffs on India:
Country-level reciprocity: The U.S. may impose tariffs equivalent to those India charges on American goods, affecting sectors like automobiles, electronics, and textiles.
Product-level reciprocity: Specific products facing high U.S. tariffs could be targeted, impacting India’s exports in those categories.
Non-tariff barriers: The U.S. might implement non-tariff measures, such as quotas or regulatory restrictions, to counteract India’s trade practices.