What are tariffs and how do they affect stock prices?

Tariffs are taxes imposed on imported goods to make them more expensive and less competitive. When the U.S. imposes tariffs on Indian exports, it can hurt Indian companies that sell to America but may benefit their competitors in other countries who can now offer more competitive prices.

Why did the U.S. impose tariffs on Indian goods?

The U.S. enacted these tariffs in response to India's continued purchasing of Russian oil. This represents the use of trade policy as a tool to enforce geopolitical objectives, affecting $48.2 billion worth of Indian exports.

Which Indian sectors are most affected by these tariffs?

The tariffs particularly impact labour-intensive sectors like textiles, gems, and automobiles. However, key industries such as pharmaceuticals, electronics, and IT services have been exempted from these trade restrictions.

How can investors benefit from trade tensions?

Trade tensions create market opportunities in two ways: companies from other countries may capture market share from affected Indian exporters, whilst Indian firms in exempted sectors may become more attractive as they're protected from the dispute.

What does 'event-driven investing' mean?

Event-driven investing focuses on opportunities created by specific events like policy changes, mergers, or geopolitical developments. In this case, the investment theme is built around the market impacts of U.S.-India trade policy changes.

16 handpicked stocks

Navigating U.S.-India Trade Tensions

The United States has imposed tariffs of up to 50% on Indian exports, creating a potential advantage for international competitors. This theme focuses on companies that may capture market share from affected Indian industries and Indian firms in exempted sectors.

Han Tan | Market Analyst

Updated today | Published at August 28