Trump’s Tariff Punch: Key Export Sectors At Risk; Watch Midcaps, Rupee-Sensitive Stocks, Defensive Plays, Says SEBI RA

In a sharp escalation in India-US trade tensions, US President Donald Trump officially announced a 25% tariff on Indian imports, effective August 1, 2025. Adding fuel to the fire, a new “penalty” targeting India’s ongoing defense and energy trade with Russia has also been introduced. Reports indicate that the penalty terms are expected by early August.

The 25% tariff move follows five rounds of trade negotiations between the two countries. Trump has criticized India for maintaining some of the highest tariffs globally and extensively sourcing military equipment and energy from Russia amid the ongoing Ukraine conflict. 

This double-hit could have far-reaching effects on India’s export sectors, currency, and diplomatic ties, said Saurabh Sahu, a SEBI-registered analyst.

What’s At Risk For India?

Sahu highlighted that this tariff imposition will impact the high-exposure export sectors such as seafood, textiles and apparel, engineering goods (including automotive and machinery), electronics, and agriculture. 

Additionally, the Indian Rupee has weakened sharply in response, raising expectations of an intervention from India’s central bank - the Reserve Bank of India (RBI). Economists have warned that if these trade disruptions persist, India’s GDP could contract between 0.3% and 0.5%.

25% Tariff Move: India’s Response

India’s Ministry of Commerce and Industry has said that they were studying the implications of the tariff move and reaffirmed its commitment to protect the country’s interests. “National interest will not be compromised,” they said. 

Negotiations are set to continue with the U.S. delegation scheduled for late August in New Delhi. This signals the possibility of dialogue to reach a trade deal despite the US’ current tariff stance. Experts view this as a ‘geopolitical pivot point’, one that will shape trade, currency, and regional dynamics. 

Tariff Impact: Sectors To Watch

Sahu noted that sectors sensitive to exports and currency will be the most hit. So traders must watch out for export-heavy midcaps, rupee-sensitive sectors, and global commodity shifts. 

He prefers domestic consumption plays, infrastructure, banking, and firms with dollar-earning or hedging capabilities, which may offer better resilience in this environment.

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