Pharma tariffs coming soon, at level 'you haven't seen before', says Trump

A day after the Indian pharma sector breathed a sigh of relief, believing that the sector had been exempted from the reciprocal 27 per cent announced by US President Donald Trump, his seemingly casual statement sent pharma stocks into a tizzy on Friday.

Leading pharma company shares, which had gained 3 to 5 per cent market value on Thursday because the US did not impose tariffs on Indian pharma, crashed up to 5 per cent in early trade on Friday as Trump said pharma tariffs are coming separately and "like never before".

Even as US tariffs were being criticised across the world, commentators in India have been exuding quiet optimism that India would be . Its ‘’ with the US and PM Narendra Modi’s personal chemistry with the US President, it was hoped, would hurt the Indian economy less. Indeed, the apparent exemption of the pharma industry was cited as ground for such optimism.

Friday, 4 April, however, destroyed the narrative that India would be better off than others. In a rude awakening, Auro Pharma, Lupin, IPCA Lab’s shares dropped up to 10 per cent as Trump warned of 'never seen before' tariffs.

The US President is signalling that he will not stop until he finalises favourable deals with different countries. He is also signalling that he will turn the screws on even former allies and ‘friends’.

India’s pharmaceutical exports were expected to touch a record $31 billion in the FY ending March 2025. For the fiscal year ended March 2024, India’s pharma exports had risen to $27.8 billion. Pharmaceuticals Export Promotion Council of India director-general Ravi Uday Bhaskar was quoted as saying that more than 50 per cent of the exports last fiscal were to highly regulated markets such as North America and Europe. “Pharmaceutical exports to the US increased 15 per cent to more than $8 billion”, he went on to add.

Whether the Modi government will bow to Trump’s demands or get ready for a period of economic turbulence remains to be seen, even as Lok Sabha Leader of the Opposition Rahul Gandhi on Thursday said the reciprocal tariffs imposed by Trump would “” the Indian economy.

Contrasting the Congress’ stance with the BJP and the RSS, Rahul said, “Someone once asked Indira Gandhi ji whether she leant left or right in the matter of foreign policy. She replied that she was an Indian and she stood straight. The BJP and RSS have a different philosophy; when asked to lean right or left, they say they bow their heads to every foreigner that comes. This is part of their culture and history.” 

Below are the sectors that will be impacted significantly:

• Gems and jewellery: The sector, which makes up 12.8 per cent ($9.9 billion) of India’s exports to the US, faces a devastating blow. India’s jewellery industry, which sends 30 per cent of its exports to the US, is staring at job losses as orders dry up. Exports of Indian jewellery to the US were already down 23 per cent this fiscal, and the additional 26 per cent duty could decimate businesses.

• Electronics & IT: A $14-billion industry, Indian electronics exports now face an uneven playing field. Network switches, routers and auto parts will be hit, while iPhones, AirPods and Macs — largely produced in Asia — will become more expensive owing to tariffs on Vietnam (46 per cent), Malaysia (24 per cent) and Thailand (36 per cent).

• Automobiles and steel: The US hiked tariffs on passenger vehicles, auto parts and raw materials like steel and aluminium, leading to higher car prices globally. India’s $2.2 billion steel market in the US is now at risk, and worse, the tariff surge could flood India with cheap steel from Korea, Japan and ASEAN nations, hitting local producers hard.

• Agriculture and food exports: Shrimp, basmati rice and buffalo meat exports to the US — a multi-billion-dollar sector — now face fresh uncertainty, potentially driving up costs for Indian exporters and American consumers alike.

• Fast fashion and retail: Nike, Adidas and other global brands will face price hikes due to Trump’s 46 per cent tariffs on Vietnam, from where a majority of these brands source production. Expect costlier sneakers and clothing worldwide — including in India.