Indian Sectors That Could Face The Heat From Trump's Reciprocal Tariffs

As US President Donald Trump pushes ahead with his reciprocal tariff plans, India will be amongst the worst to hit with sectors like food products, vegetables, textiles and clothing set to be the most impacted ones.

Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, which could take effect from April this year. These tariffs could affect nearly every country, with India, Japan, and the European Union being hit the most.

India's trade surplus with the US is low compared with other Asian peers, with the US currently accounting for 17.7% of India's goods exports. India comprises a rather tiny share of US' overall imports, with its share at 2.7% as of 2024.

Tariffs imposed by India are among the highest, with the weighted average tariff rates imposed on US imports at 8.5% versus tariff rates imposed by the US at 3%, according to Morgan Stanley. South Korea will see the worst impact with their weighted average tariffs at 14.4%.

India's tariff rates are at the higher end and likely more exposed to reciprocal tariffs if implemented, Morgan Stanley said. Food products and vegetables stand to be affected the most as India imposes higher average tariffs on the US on a relative basis.

Electrical machinery, gems and jewelry, pharma products, textiles, autos, iron and steel, autos and chemicals are among the key commodities that India exports to the US.

Electrical machinery, pharma products and pearls and precious stones are the commodities with the largest US trade deficit with India.

Meanwhile, minerals and fuels, aerospace and optical parts are the commodities with largest trade surplus.

Indirect impact from uncertainty stemming from tariff and trade policies creates an overhang on business confidence and potentially lower global growth, Morgan Stanley said.