Donald Trump's April 2 tariffs are coming: What investors need to know and which stocks to watch

The clock is ticking on Donald Trump's "Liberation Day" tariffs, set to kick in on April 2—threatening to disrupt billions in global trade and deliver a likely jolt to Indian exports. Branded as a move to impose "reciprocal" tariffs, the plan targets countries running trade surpluses with the US.

India, long labeled a “tariff king” by Trump, is directly in the crosshairs and staring at potential export losses of up to $31 billion.

From cars to generics, the impact is expected to be sweeping. A 25% levy on imported autos and parts is the showpiece of Trump’s pitch to revive American manufacturing. But sectors like pharmaceuticals, electronics, and gems and jewellery are also bracing for impact.

India's total exports to the US stood at $77.5 billion in FY24, compared to $40.7 billion in US exports to India. With America being the third-largest investor in India, accounting for $67.76 billion in cumulative FDI since 2000, the stakes are high.

Pharma is among India’s most exposed sectors. While the US currently imposes minimal duties on pharma imports, India’s 10% tariff on US pharma goods places it squarely within the scope of reciprocal action. Industry groups have raised alarms, saying the added cost burden would be difficult for distributors and generic manufacturers to absorb.

Experts note that while some disruption is expected in the short term, the sector's overall strength offers a buffer. They point out that India remains a dominant supplier of generics to the US, and that any fallout is likely to be gradual rather than immediate. Others caution that since many Indian pharma firms already operate on thin profit margins in the US—often between 5% and 20%—they may need to rethink their product strategies to stay viable under higher duties.

Stocks to watch: Sun Pharma, Cipla, Lupin, Dr. Reddy’s, Divi’s Labs.

In electronics manufacturing, companies like Dixon Technologies and Kaynes Tech, which have been eyeing the US market for expansion. The government is reportedly finalising a ₹25,000 crore incentive scheme to bolster domestic EMS players.

Gems and jewellery exports—another key segment—could also take a hit. Several Indian firms, including Malabar Gold, Renaissance Jewellery, Rajesh Exports, and Kalyan Jewellers, have a growing presence in the US market.

By contrast, metals may be less directly affected. Experts say India has historically had a limited export footprint in US metal markets. However, they warn that retaliatory moves elsewhere could result in China diverting its excess steel to India, depressing domestic prices.

India’s IT services sector is largely insulated from direct tariff effects, but experts advise caution. If trade tensions escalate and client spending in the US tightens, firms like Infosys and TCS could still feel a financial drag.

Meanwhile, economists at Nomura have noted that India has taken a more conciliatory stance toward the Trump administration than some of its peers.

"While the BTA will likely take some time to fructify, we view it as an encouraging sign. It signals that, while India is in the direct line of fire on US reciprocal tariffs, the BTA could reduce the impact of any such tariffs on India. India is in Mr. Trump’s direct line of fire on reciprocal tariffs," Nomura economists said.

They also flagged that India’s weighted average effective tariff rate on US imports is substantially higher than what the US imposes on India. Alongside that, India’s use of non-tariff barriers and application of a goods and services tax could become critical evaluation points in how the US determines tariff reciprocity.