The sweeping tariffs proposed across sectors by US President Donald Trump are scheduled to be imposed starting April 2, with most analysts worried about their impact on companies, and in turn the financial markets.
Recently, the US administration signaled that it will impose sectoral tariffs on energy, pharmaceuticals, semiconductors, agriculture, copper, and lumber.
The potential implementation of this, wrote Chetan Ahya, chief Asia economist at Morgan Stanley in a recent coauthored note, will almost affect all economies in Asia directly either via economy-specific tariffs, or sectoral tariffs.
“On April 2, we are expecting that the US will propose a plan for addressing reciprocity in trade relations.
"But our key concern remains that elevated levels of policy uncertainty weigh on capex and trade – damaging the business cycle,” Ahya said.
Analysts at Barclays, meanwhile, estimate that nearly $22 billion worth of India’s exports (30 per cent of exports to the US and 5 per cent of total goods exports) are most at risk.
However, they expect India to adopt a conciliatory tone on select tariffs and also address some non-tariff barriers.
Here is what brokerages make of the developments and their likely impact.
Morgan Stanley
The imposition of 25 per cent tariffs on auto and auto parts will affect Japan and Korea the most, as auto exports to the US account for 7 per cent of their exports.
The globalised nature of the autos supply chain and the effect on Asian economies’ auto parts exports mean that the overall effect on Asia’s exports could be larger than the direct exposure to the US.
If the 25 per cent auto tariff remains in place for a prolonged period and auto exports to the US fall 15-30 per cent, per the simulations of possible volume drops, it would have a negative impact of 0.2 – 0.3 percentage points on Japan's gross domestic product (GDP) growth.
This is significant considering our current real GDP growth forecast for Japan is only 0.9 per cent in 2025 on a quarter-on-quarter (Q-o-Q) basis.
Jefferies
Confirmation of auto tariffs (at 25 per cent) due to be implemented on 2 April is higher than expected.
The implications are clearly bearish for an auto industry already facing an existential crisis, and particularly negative for Japan.
Julius Baer
The introduction of tariffs and retaliatory measures of the affected countries (primarily Canada, China, Mexico, and the European Union) does have an impact on the materials sector, but this is difficult to quantify.
While on one hand, the potential level of tariffs changes almost on a daily basis, on the other hand, the indirect effects from tariffs are in many cases more material than the direct impact.
In general, chemical companies are well diversified across geographies and can supply customers from local production sites.
However, the customers themselves may be impacted from tariffs and therefore lower their purchase orders.
Construction materials companies are the least affected by tariffs, as their production sites are mostly close to the customers, who themselves are mainly servicing domestic markets as well. Mining companies are selling their commodities on international markets.
Tariffs may dampen demand and therefore prices, although we do not see any clear signs of that at the moment.
Barclays
The potential imposition of like-for-like reciprocal tariffs could mean US import tariffs on India would rise from the current 2.7 per cent to 15.7 per cent (trade weighted).
The sectors most affected could be electrical machinery and equipment (including smartphones), agricultural products, gems and jewelry, pharmaceuticals, and autos.
India's trade-weighted import tariff on the US is around 10.5 per cent, higher than the corresponding US tariff rate at 2.7 per cent.
The largest tariff differentials are on agricultural goods, automobiles and processed food (25-40 per cent).
They are relatively lower for petroleum products, gems and jewelry, and electrical machinery and equipment.
Crisil Ratings
For India’s specialty chemicals sector, the operating margin that was earlier estimated to improve to 15.5-16 per cent in fiscal 2026 (FY26), could decline around 150 basis points to 14-15 per cent.
The tariff threats and persisting pricing headwinds could mean fiscal 2026 could mark the third consecutive year of pressure on realisations.
Even as volumes recover, aggressive dumping from China could erode the pricing power of domestic manufacturers and weigh heavily on profitability.
Decoding Tariff
Morgan Stanley: 25% tariffs on auto and auto components will affect Japan and Korea the most
Jefferies: Tariffs particularly negative for Japan
Crisil Ratings: The tariff threats could mean FY26 could mark the third consecutive year of pressure on realisations for India’s specialty chemicals sector
Barclays: For India, the sectors most affected could be electrical machinery and equipment, agricultural products, gems & jewellery, pharmaceuticals, and autos
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