Sridhar Vembu Says Donald Trump’s Tariffs Could Be Fatal For This Sector

Zoho founder Sridhar Vembu has raised a red flag over India’s deep dependence on IT services exports, warning that shifting global economic trends—especially in the U.S.—could have serious implications for the Indian IT sector.

Vembu reflected on the broader impact of U.S. tariff policies under Donald Trump , noting that the immediate fallout could be severe and potentially fatal for manufacturers that rely heavily on imported parts. While the U.S. may eventually revive its domestic manufacturing base, Vembu emphasized that India must prepare for a shift as U.S. corporations begin cutting back on inefficient IT spending.

In a detailed post on X, Vembu reacted to a thread by analyst IndiaBalaji, who explained how U.S. tariffs are reshaping American manufacturing. Vembu used this to highlight a larger concern for India.

“In India, we have to wean ourselves from dependence on IT services exports, because so much of it was going to care and feed inefficient IT systems in America,” he warned.

He explained that as corporate profit margins shrink due to rising costs in the U.S., large companies will be forced to scrutinize IT budgets, potentially hurting India’s export-driven tech industry.

U.S. Manufacturing Is Coming Back—But With Pain

Vembu said the return of manufacturing to the U.S. will have painful short-term effects.
“Longer term the ‘screw factory’ and the ‘toaster factory’ will return to the US… But the short-term pain can be quite severe", he mentioned. 

He warned that smaller firms dependent on imported parts might not survive, and added,
“Another effect is that corporate profit margins will take a hit and that will impact the stock market", he said.

A Warning Against US

Looking ahead, Vembu predicted a deep transformation in the U.S. economy:
“Rebuilding manufacturing in America will also spell the end of extreme financialization—hedge fund quants have to become mechanical engineers", he said. 

He added that such structural changes won’t happen overnight:
“That kind of change takes a generation, not 6 months, and doesn't happen without a lot of pain along the way", he said further.

What's The Way Forward:

“We Have to Look Much Further Back in History,” he wrote on X giving insight into the next 30 years. 

Vembu urged Indian policymakers and industry leaders to reimagine the future. 
“The last 30 years do not give us a lot of insight about the next 30 years. We have to look much further back in history for lessons", he concluded.