Trump's accusation that India exploited the US raises the odds of tariff escalation. Here are the sectors most exposed and the trade-management framework for the risk.
Former President Donald Trump accused India of having exploited the United States for years, injecting fresh uncertainty into bilateral trade negotiations just as a deal was nearing finalization. The comment, reported by the Economic Times, places a spotlight on the unresolved tariff and market-access issues that have defined US-India trade relations. For traders, the statement is a concrete risk event–not just political rhetoric–because it signals that the US side may demand structural concessions rather than incremental adjustments.
The simple read is that Trump's charge complicates the path to a deal, increasing the probability of higher tariffs on Indian exports. The better market read requires understanding the specific sectors, the tariff mechanisms in play, and the positioning that would amplify or cushion the blow.
Trump's statement suggests that the US negotiating team will take a harder line, potentially demanding reciprocal tariff reductions, greater market access for US agricultural and manufacturing goods, and limits on Indian digital services taxes. The mechanism works through two channels: direct tariff costs and investor sentiment re-rating.
Indian exporters to the US pay tariffs at customs. If the US raises duties on Indian goods, the cost can be passed to US consumers (reducing demand), absorbed by Indian producers (squeezing margins), or mitigated by currency depreciation. Each sector has different pass-through capacity.
Even without new tariffs, the uncertainty of a trade dispute pushes equity risk premiums higher. Indian stocks trading at elevated price-to-earnings multiples–particularly in IT services, pharmaceuticals, and textiles–become vulnerable to multiple compression. A 5% tariff on a sector with 20% profit margins could wipe out 25% of net income if the tax cannot be passed through.
The following sectors have the highest direct revenue exposure to the US market and the thinnest margin buffers.
Indian IT services companies like Tata Consultancy Services, Infosys, and HCL Technologies generate a substantial portion of revenue from US clients. While tariffs on services are rare, Trump has previously floated the idea of taxing cross-border digital services. A trade dispute could tighten H-1B visa approvals, increasing staffing costs for US operations.
Indian generic drug makers–Sun Pharma, Dr. Reddy's, Cipla–face a different risk. The US is their largest export market. Trump's charge could be a prelude to executive action on drug pricing, which would directly impact margins. Tariffs on drug imports, while less common, have been threatened in previous trade disputes.
Textile exporters have the least pricing power. A 10% tariff on Indian garments would likely be absorbed by Indian manufacturers, crushing margins. This sector already faces competition from Bangladesh and Vietnam.
The quote comes ahead of a planned trade deal finalization. The precise date is not given, the negotiation window is narrow. A deal would likely include:
Trump's charge suggests the US side may demand more, delaying or scuttling the deal.
The trade risk is not contained to Indian equities. Exchange-traded funds tracking Indian markets–the iShares MSCI India ETF (INDA) and WisdomTree India Earnings Fund (EPI)–would see direct downside. US companies with significant India revenue, such as Coca-Cola, PepsiCo, and Mastercard, face their own tariff and regulatory risk if India retaliates.
The Indian rupee tends to weaken during trade tensions as foreign portfolio investors reduce exposure. A 5% rupee depreciation against the dollar would offset some tariff impact for exporters, would hurt importers and increase inflation. Indian government bond yields could rise if foreign selling pressures build.
For active traders, the event introduces a catalyst that can break range-bound markets. Here is a practical framework:
AMC Entertainment Holdings (Alpha Score 27/100, Weak) is not directly tied to US-India trade. Its low score reflects the broader risk environment for companies with high leverage and discretionary exposure. The same principles apply to Indian stocks with weak balance sheets: they will be first to sell off if trade uncertainty rises. See the AMC stock page for context on how weak scores correlate with tariff sensitivity.
The next concrete marker is any official statement from the US Trade Representative or the Indian Ministry of Commerce. If the charge remains a campaign-style remark without policy follow-through, the risk premium will fade. If it becomes the administration's position, expect a repricing across Indian equities and the rupee.
For a broader analysis of how trade wars affect portfolio construction, see our stock market analysis guide. Traders adjusting their watchlist may also consult our ranking of the best stock brokers for international exposure.
The asymmetry of outcomes favors a cautious allocation: reduce exposure to tariff-sensitive sectors and set stop-losses wider to accommodate volatility. If the deal gets done, the selloff could be a buying opportunity. If it collapses, the drawdown will be sharper than consensus expects.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.