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With the U.S. announcing new tariffs under President Trump, Indian market experts have weighed in on the potential impact.
While some warn of global risks and rising inflation, others note that key Indian sectors such as IT and pharmaceuticals are likely to remain largely unaffected.
Let’s take a look at what the experts have to say:
Arindam Mandal, Head of Global Equities at Marcellus Investment Managers, feels that defensive sectors will continue to do well. He said, “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. There are some temporary exemptions—such as for pharmaceuticals, semiconductors and energy—but their impact may be limited. For instance, in the case of semiconductors, the supply chains are deeply interconnected with China and Taiwan, raising questions about how much the exemption can truly mitigate disruptions. 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.”
Prashant Khemka, Founder of Whiteoak Capital offered an optimistic outlook, stating that the worst effects of the tariffs on the markets have already been priced in. He explained that the tariffs introduced by the U.S. President do not impact India’s leading industries, such as the IT and pharmaceutical sectors. Moreover, he noted that countries with strong textile manufacturing bases—like China, Vietnam, Thailand, and Cambodia—have been subjected to higher tariffs. This, he suggested, presents an opportunity for India’s textile industry, which could benefit from a potential shift in global manufacturing.
Viram Shah, Founder & CEO, Vested Finance believes that the tariff driven volatility in the market is likely to continue for a while till the dust finally settles. He said, "Trump's 'Liberation Day' tariffs, if they're kept in place and especially if they face retaliation from targeted nations, will be a significant economic event after the 2008 financial crisis and COVID. Especially export dependent countries like China and Germany will face the brunt the most if these tariffs do come in. India with our domestic consumption capability will likely remain a bright spot. These tariffs though do raise the risk of a worldwide recession if they get enacted. However, whether they really get implemented is yet to be seen. Drops in price may provide interesting entry opportunities into high quality global companies at good valuations."
Talking about the impact of US tariffs on debt markets, Mahendra Kumar Jajoo, CIO – Fixed Income, Mirae Asset Mutual Fund said, "The US tariffs introduce uncertainty in global trade, which could lead to volatility in commodity prices and currency movements, impacting investor sentiment. However, India’s fixed income market remains resilient, backed by the RBI’s strong liquidity management. With inflation under control and a stable interest rate outlook, Indian bonds continue to offer an attractive investment opportunity. While global disruptions may create short-term noise, India’s bond market fundamentals remain strong, providing investors with stability amid external uncertainties. In this environment, a strategic focus on high-quality fixed-income assets remains key for long-term portfolio resilience."
