President Trump announced on April 2, 2025, the imposition of reciprocal tariffs on imported goods from many countries, including China, India, Bangladesh, Vietnam, Cambodia, the European Union, etc. The tariffs imposed vary from country to country. They are 34% on imports from China, 20% on the European Union, 46% on Vietnam, 36% on Thailand, 32% on Taiwan and Indonesia, 49% on Cambodia, 10% on the UK, 37% on Bangladesh, 10% on Australia, 26% on India, etc. Consequently, upon the imposition of tariffs, the exporting countries will stand to lose on the goods the USA imports from them. As regards India, many countries, including India, stand to lose on goods they export to America. President Trump previously imposed 25% tariffs on imports of autos and auto parts, and this has been excluded from the reciprocal tariffs.

Indian exports to the USA consist mainly of electronics, gems and jewelry, pharmaceuticals, machinery, mineral oil, textiles, apparel, and clothing, etc. Trump is yet to declare tariffs on pharmaceuticals. Export of many of these goods to the USA may not be viable if the enhanced tariffs take effect. The way out is to increase the price of these goods, which will affect the export business and the citizens of the USA. For example, India’s seafood export to the USA, which amounts to $2.00 billion, may have to face stiff competition from Ecuador, which is charged 10% reciprocal tariffs. It is apprehended that the Indian gems and jewelry business will also suffer. The Gems and Jewellery Export Council has opined that it may not be possible for them to maintain $9.3 billion worth of goods exported to America, and both American consumers and Indian exporters will be largely affected.

In textile, apparel, and clothing export, which is worth $5.6 billion, however, the position does not appear to be so gloomy. India’s main contenders in textile export are Bangladesh, Cambodia, Vietnam, etc., which will have to bear higher tariffs than India, and as such, India will be in a competitively better position. As regards electronics, which are mainly exported by China, India may also fare better as the import tariffs are higher on China than on India. Moreover, talks are ongoing in respect of bilateral trade with the USA to solve various issues in connection with the imposition of tariffs.

The effect of tariff imposition has been shattering to the stock markets all over the world. The USA markets tumbled around 6% on April 4, 2025, apprehending inflation and recession. Metals also declined significantly. And the Asian markets, including India, and the European markets also fell steeply on April 3, 2035, and April 4, 2025. India, however, did not fall much on April 3, 2025.

Meanwhile, China has announced counter tariffs of 34% on all USA imports into China. This may not be a possible solution to the dilemma as it will jeopardize bilateral trade if some other countries follow suit.

As regards India, the industry as a whole is on an upward trajectory. Experts have postulated 6.5% growth of the economy in the current financial year, and as such, investors may choose some sectors for the purchase of shares as the market stabilizes. FMCG is one such sector. Income tax concession places more disposable funds in the hands of the consumers, which will partially benefit FMCG companies like Marico, Dabur, Tata Consumer, etc. Reciprocal tariffs on pharma are also likely to be announced soon, and as such, selection from this sector will depend on the quantum of tariffs imposed on it.

But the real growth may be seen in infrastructure, construction, and related sectors. Large-scale infrastructure projects and construction activities are in full swing. So, selection may be made from these sectors right now. This will also accelerate engineering capital goods and cement industries. As the growth of cement follows GDP growth, this sector is likely to shine in the coming months. Moreover, the declining crude oil prices will help the industry in reducing production costs. The energy and financials will also benefit. 

Here are some stocks that may see upward movement in the coming months:

• Infrastructure & Construction: Larsen & Toubro, NCC, NBCC, RITES, JSW Infra
• Engineering & Capital Goods: BHEL, Siemens, Kirloskar Oil Engines
• Power & Energy: CESC, Tata Power, NTPC, JSW Energy
• Cement: ACC, Ambuja Cement, JK Cement, JK Lakshmi Cement
• Automobiles: Hero MotoCorp, Maruti Suzuki, Mahindra & Mahindra

Metal companies, however, should be avoided for now.