Trump’s 26% tariff on India worse than expected, brokerages warn of GDP hit

Indian exports unviable, while UBS labeled it a “negative event” for the market, citing a direct threat to GDP.

While the across-the-board duties threaten to make some exports unviable, the exemption for pharmaceuticals—India’s largest export category to the US—provided a rare bright spot, triggering a rally in Indian drugmaker stocks on Thursday.

Pharma breathes easy— for now

The exclusion of pharmaceuticals, which account for nearly 14% of India’s exports to the U.S., from the tariff list offered relief to Indian drugmakers, but brokerages warned that the reprieve may not be permanent.

“Pharma-specific tariffs at a later date cannot be fully ruled out,” Jefferies said, though it currently sees minimal impact on Indian drugmakers. The brokerage noted that US-focused generic pharma stocks were likely to rally, with Syngene deriving 68% of its revenue from the US, Gland Pharma 54%, and Biocon 50%, making them among the biggest beneficiaries.

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Citi said the exemption aligns with its view that the probability of US tariffs on Indian pharma was always low but added that it remains unclear whether this is a short-term or medium-term arrangement. CLSA echoed this view, noting that pharma stocks had already priced in a potential 10% tariff, making them “likely to bounce back.”

Wider economic fallout looms

Beyond pharmaceuticals, brokerages painted a grim picture for Indian exports, warning that the broad-based tariffs could disrupt trade flows. Macquarie highlighted that auto exports, which make up 3%