Macquarie has raised serious concerns over the sweeping 26% blanket tariff imposed by the Trump administration on Indian exports, calling it a worse-than-expected blow that could have significant macroeconomic consequences.
According to the brokerage, this across-the-board tariff—part of the broader reciprocal tariff regime—is highly negative for India, with major sectors such as pharmaceuticals and automobiles likely to bear the brunt. Macquarie warns that a blanket tariff of over 20% could potentially shave off 50 basis points from India’s GDP, amplifying economic stress in a year of global slowdown.
India is currently engaged in bilateral trade negotiations with the U.S., which may offer a path to exemptions or reduced duties for certain sectors. However, the uncertainty remains high.
Highlighting sectoral exposure, Macquarie notes that pharma exports to the U.S. stand at $12.2 billion, accounting for nearly 14% of total Indian exports to the U.S. Meanwhile, automobile exports contribute about 3%. A flat-rate tariff on all products could therefore disproportionately affect these key verticals.
The brokerage’s tone contrasts with earlier optimism in some circles that Indian pharma might be spared, as it urges investors and policymakers to closely track the evolving trade talks and sector-specific exemptions that may emerge.
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