US President Donald Trump has announced an additional 25% tariff on Indian exports, raising the total duty to 50% in response to India’s continued importation of Russian crude oil. The decision is expected to heavily impact sectors such as textiles, jewellery, and auto ancillaries, which are integral to India’s labour-intensive industries. As a result, the direct earnings impact on listed companies is likely to be limited, though second-order effects could be significant. A 21-day off-ramp period remains for potential negotiations.
Emkay Global has expressed confidence in India’s broader economic outlook, forecasting a consumption-led recovery in the latter half of FY26. The brokerage, however, remains confident in the broader economic outlook and expects a consumption-led recovery in the second half of FY26.
It is prepared to overlook short-term volatility caused by the tariff announcement, considering buying opportunities should the market dip by over 5%.
Emkay also indicated that government intervention might be necessary to mitigate the adverse effects on banks and sectors facing non-performing loans.
Emkay expects the government to intervene with fiscal support for the affected sectors, including measures to protect banks from a potential spike in non-performing loans (NPLs).
Observers note that the current tariff structure might not be final, with Emkay stating that this may not be the final form of the tariffs, and sector- and stock-level impacts could evolve in the coming days. Ultimately, the brokerage believes that any negative cycle involving the rupee depreciation and foreign portfolio outflows will be short-lived.
On Thursday, US President Donald Trump inked an Executive Order imposing 25 per cent more tariff on India due to New Delhi’s continued purchase of Russian oil. The order has been titled — ‘Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine’.
The tariff will be effective for goods entered for consumption or withdrawn from a warehouse for consumption on or after 12:01 am Eastern Daylight Time (EDT), 21 days after the date of this order.
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