Indian IT Stocks Decline as Trump-Era Tariffs Reinstated by US Appeals Court

Indian IT stocks witnessed renewed pressure on May 30 after a US federal appeals court temporarily reinstated tariffs imposed during former President Donald Trump’s tenure, leading to a sharp reversal in sentiment that had improved just a day earlier. The decision unsettled investors by reigniting fears over reduced U.S. tech spending and increased trade barriers — key risks for India’s export-dependent IT sector.

Highlights:

• TCS, Infosys, HCL Tech, and Tech Mahindra fell up to 2% in intraday trade.

• Nifty IT index declined nearly 1%, reversing prior day’s rally.

• US appeals court granted an interim stay, reapplying the Trump-era import tariffs.

Appeals Court Ruling Reverses Optimism from Earlier Verdict

On May 29, the US Court of International Trade had blocked most of Trump’s wide-ranging “Liberation Day” tariffs, citing presidential overreach under the International Emergency Economic Powers Act (IEEPA). The decision had lifted IT counters globally on hopes of improving trade conditions and a more favorable environment for cross-border services.

However, the US Court of Appeals overturned the lower court’s injunction on May 30, granting an immediate administrative stay. The ruling reactivated several Trump-era tariffs while the appeal is under further legal consideration, thereby introducing new ambiguity about the timeline and durability of any tariff relief.

Highlights:

• Court ruling suspends the earlier injunction that blocked Trump’s tariffs.

• Tariffs may remain in effect pending a full hearing or US Supreme Court appeal.

• Markets now face uncertainty over long-term direction of US trade policy.

Indian IT Stocks Face Pressure Amid Trade and Recession Risks

The reinstatement of tariffs hit Indian IT services firms particularly hard, as the sector depends significantly on discretionary spending by U.S.-based enterprises. Stocks such as TCS, Infosys, HCL Technologies, LTIMindtree, and Tech Mahindra saw intraday losses of up to 2%, and the Nifty IT index dropped nearly 1%, dragging broader sentiment in the technology space.

Brokerage houses responded quickly to the developments. Bernstein downgraded Indian IT to ‘equal weight’, warning of a probable slowdown in U.S. enterprise spending due to the ripple effects of renewed trade hostilities. The firm also expressed concern about the potential onset of a US recession, which could further dampen demand for outsourced digital transformation and cloud services.

Highlights:

• Bernstein downgraded Indian IT sector amid fears of reduced US tech spending.

• Nomura warned Indian IT firms are particularly exposed to these tariff dynamics.

• Fears of a U.S. recession compound the sector’s vulnerabilities.

Broader Market Implications and Outlook

The abrupt policy shift in the U.S. not only complicates business planning for Indian technology exporters but also introduces volatility across emerging market equities with heavy dependency on American client bases. With a potential legal escalation to the US Supreme Court, traders and industry analysts are now assessing multiple risk scenarios that include extended trade friction, weakening U.S. economic momentum, and tighter discretionary budgets across key sectors like finance, retail, and manufacturing — all critical verticals for Indian IT.

Highlights:

• Tariff-related uncertainty threatens global IT services procurement cycles.

• Broader risk-off mood in equity markets adds to sector-specific pressures.

• Legal resolution could stretch for months, prolonging business uncertainty.