Tariff turmoil deepens: 'US will also suffer,' says SBI Report, urges Centre to 'keep pride intact'

Prime Minister Narendra Modi had met US President Donald Trump in Washington earlier this year in February. (AFP Photo)

Amid the tariff-induced volatility in the financial world, a latest SBI report has painted a grim picture for the US.

The SBI Research Report, which was released on Friday, said that while the major economies, including India, will see some impact of the steep levies, the US won’t go unscathed either. While talking about the tariffs on pharmaceuticals, the SBI report said that while "India may be hit… but the US will also suffer.”

The report stated, “~40% of India’s pharma exports go to the USA (FY25), India’s share in the US’s total pharma imports is 6% (in 2024). This indicates that a possible tariff of 50% on pharma exports may hit earnings of pharma companies by 5%-10% in FY26, as many big pharma companies' revenue from the US stood in the range of 40-50 percent.”

It further stated, "In generic drug market, India supplies nearly 35% of the pharmaceutical needs of the US. If US shift manufacturing and API production to other countries or domestic facilities, which will take minimum 3-5 years for meaningful capacity."

The report warned that the new tariff regime will translate into a possible levy of around 50% on pharma exports that will impact earnings of pharma players by "5%-10% in FY26, as many big pharma companies' revenue from the US stood in the range of 40-50%."

The report said that the new executive order by US President Donald Trump against the “world’s largest democracy” can be a bad policy decision for the US government and its populace. It sought the Centre to keep the “pride intact” while negotiating terms as part of the tariff policy.

The report also said that any levy on Indian pharma will be counterproductive for the Trump administration as "higher price of affordable medicines increase both expenditure under Medicare and Medicaid and also the out-of-pocket expenditure of private citizen."

The Crude Shock

The report also talked about the India’s oil trade with Russia. The issue has been at the heart of Trump’s tough stance against Narendra Modi government.

Looking at the numbers since of past five years, the SBI report said, “India turned to purchasing Russian oil sold at a discount (capped: $60 per barrel), to ensure its energy security, after Western countries imposed sanctions on Moscow and shunned its supplies over its invasion of Ukraine in February 2022.”

Since FY20, India's oil trade with Russia has grown exponentially. From just 1.7% share in total oil imports in FY20, Moscow's share has increased to 35.1% in FY25. This makes Russia the largest oil importer for India.