With the recent announcement of a potential 50 per cent tariff rate on most Indian exports to the US, markets have tumbled and investor confidence in India’s exporting powerhouses is jittery for the time being. Although it is highly unlikely that these measures threaten the sole operations of businesses, growth prospects and the comparative advantage India possesses over many vital sectors are now on a backfoot. This is due to the US’ vital share in the exports of these industries.
Let us take a deeper look into what is at stake and how markets have reacted.
The tariff on competing countries in the chart above exclusively considers the highest rate levied on India’s competitors. China stands out as a major competitor in all four industries with its blanket tariff of 30 per cent. In the seafood sector, countries such as Ecuador and Indonesia threaten India’s trade position, and have significantly lower tariffs of 15 per cent and 32 per cent, respectively. The same goes with the gems and jewellery industry, where the UAE and Thailand have 12 per cent and 36 per cent tariffs in contrast to India’s 55 per cent. Vietnam and Bangladesh now have advantage over India’s textile exports with their rate of 20 per cent.
The potential hit to revenue has prompted some firms to hedge their businesses by considering shifting some manufacturing bases. For example, last week Titan announced that it is evaluating shifting some manufacturing to UAE to maintain low tariff access to US markets. However at the same time investors must also be cautious to not over react as the environment is volatile.
The last chart tracks share price performance of some stocks since April 2 when Trump first announced reciprocal tariffs. These stocks are amongst those facing heat now due to their US exposure. Performance of some since April 2 indicates resilience to tariff threats. Whether this continues or they reel under pressure over next few weeks is something to monitor.
The author is an intern with bl.portfolio
Published on August 10, 2025
