US President Donald Trump, on April 2, announced the highest American tariffs, causing turbulence in the Indian textiles, electronics, and engineering goods sector. While the majority of sectors were trading in red, pharma stood out as one such sector that was seen to be trading in green. Nifty Pharma on April 3 surged up to 4 per cent with IPCA Laboratories, Gland Pharma, Lupin, Aurobindo Pharma, Natco Pharma, and Sun Pharmaceutical Industries leading the positive momentum.
At 12:47 on April 3, Nifty Pharma was at 2.29 per cent after reaching a peak of 4 per cent.
Advertisement
Tariff Details on Different Countries
India, on April 2, was hit with a 26 per cent tariff on its exports to the US.
Trump had announced reciprocal tariffs on various Asian and European countries, including China, Vietnam, Taiwan, Bangladesh and Thailand.
However, Indian pharmaceuticals, semiconductors, copper, and energy products will not face tariffs.
Additionally, Trump announced that the US will apply a baseline 10 per cent tariff on all imports in addition to a reciprocal tariff on a few countries.
India’s new tariff rate is more than the 20 per cent imposed on the EU, 24 per cent on Japan, and 25 per cent on South Korea. However, it remained well lower than the peak of 54 per cent that was imposed on China, which included a 34 per cent reciprocal tariff and a 20 per cent preexisting tariff. Additionally, Vietnam, another manufacturing hub has been hit with a 46 per cent tariff, while Indonesia and Thailand are facing 32 per cent and 36 per cent respectively.
Advertisement
US President Donald Trump has exempted pharma exports from the reciprocal tariffs, giving relief to Indian pharma companies, as India’s major exports go to the US.
As per the White House factsheet with information on the exemptions: "Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States."
Advertisement
The pharmaceutical sector stood out as the clear winner in the tariff announcement. Bhavin Mukund Mehta, Vice-Chairman of Pharmexcil and Whole-Time Director of Kilitch Drugs Ltd, said that India imports $800 million worth of pharma products from the US and exports around $8.7 billion. Pharma trade ties of India with the US are strong and this is expected to create a win-win situation for India. He anticipated that India would gain the upper hand over Asian countries.
Meanwhile, a few developed nations, including the UK, were hit with a 10 per cent reciprocal tariff, and Switzerland faced a 34 per cent reciprocal tariff.
