Will Donald Trump's tariffs affect TCS, Narayana Murthy's Infosys? Report claims...

Global ratings agency Moody’s has warned that several industries in South and Southeast Asia will be affected by the US government's new tariffs. In a recent report, the agency said that companies in the automotive, steel, chemicals, and business-services sectors are the most vulnerable to these trade policy changes.

The US will impose reciprocal tariffs starting April 2, targeting countries with large trade deficits, such as India. Moody’s noted that this could put major Indian businesses at risk.

While business-services firms are not directly affected by tariffs, they could suffer due to stricter US immigration policies. Many Indian IT companies, including Tata Consultancy Services (TCS), Infosys, and Hexaware Technologies, depend on skilled Indian workers on H1B visas for long-term projects in the US. The report stated that nearly 75% of H1B visas in 2023 were issued to Indian nationals. To reduce risks, these companies have increased hiring within the US. However, higher costs and visa restrictions could still impact them.

Despite these challenges, Moody’s said that TCS and Infosys are in a strong position to handle rising costs because of their high profitability. On March 17, Infosys shares were trading at Rs 1,588, while TCS shares dropped 0.48% to Rs 3,494. Hexaware Technologies’ stock remained steady at Rs 471.

In the steel and chemicals sectors, the US tariffs are expected to have minimal direct impact, as companies like Tata Steel, and PTT Global Chemical earn most of their revenue from Asia. However, Moody’s warned that cheap exports could be diverted to India, increasing supply and lowering prices. Indian steelmakers, already struggling with cheap Chinese imports, could face further difficulties.