SA Asks: Which stocks could be impacted by higher India tariffs?

Last week, President Trump announced he was imposing a 25% tariff on goods imported from India, plus potential punitive tariffs for the country buying oil and weapons from Russia.

We asked Seeking Alpha analyst JP Research which stocks they thought could be impacted by the tariff hikes.

JP Research: There isn’t a concrete India-US trade deal in place yet, and both sides are still very much in negotiation. What we do know is that President Trump has ratcheted things up with a 25% tariff on Indian imports, plus an undisclosed penalty for energy and defense dealings with Russia. Benchmarked against regional peers like Vietnam (20%), the Philippines (19%) and Indonesia (19%), this rate seems very punitive.

Even if a 25% rate does stick, India’s relatively low goods exports to the US mean any near-term direct impact is limited for large cap Indian ETFs like iShares MSCI India ETF (BATS:INDA) and Franklin FTSE India ETF (NYSEARCA:FLIN). Small cap-focused iShares MSCI India Small-Cap ETF (BATS:SMIN) will be hit harder, as it has exposure to India’s fast-growing electronics manufacturing sector, a major “China+1” beneficiary. Most concerning to me, though, is the tariff treatment for services (Infosys (NYSE:INFY) and Wipro (NYSE:WIT)), and pharma (Dr. Reddy’s Laboratories (NYSE:RDY)). An adverse outcome would hit India’s near-term growth and corporate earnings trajectories a lot harder.

As for multinationals like Apple (NASDAQ:AAPL) that have invested in India as a secondary production location, this shouldn’t be too material, as many have alternatives (in Vietnam, for instance). Instead, I’d look a lot more closely into entry barriers on the India side, as any concessions (monetary and non-monetary) could open up massive new market opportunities for them; auto companies like Tesla (NASDAQ:TSLA) stand out as potential beneficiaries.