Trump’s Auto Tariffs to Hit Indian Component Makers

The 25% tariff policy of Trump affects Indian auto component manufacturers by reducing export value and earnings but it helps US component makers achieve increased profits.

Indian auto part manufacturers will encounter substantial negative effects because of the United States government's imposition of a 25% tariff on essential automobile components. Tata Motors and Eicher Motors along with Sona BLW and Samvardhana Motherson must address risks because the US stands as an essential export destination for Indian automobile production.

As the leading indicator of vehicle production in the UK Jaguar Land Rover stands at risk since it creates its products within British manufacturing facilities that will come under the imposed tariff. Samvardhana Motherson maintains protection with its US-based production as it supplies to Tesla and Ford. The US-based operations of Sona Comstar could encounter financial problems as they collect 66% of their revenue from that market.

Components exported from India reached $21.2 billion during FY24 as the sector participated in the worldwide $1.2 trillion market. The latest tariffs adopted by Crisil Ratings Senior Director Anuj Sethi will diminish operational margins of Indian exporting businesses by 125-150 basis points. He explained that both indirect suppliers and facilities with US locations will experience consequences but those market-based facilities may benefit from increased utilization rates.

Long-term trade disturbances now face the automobile industry due to the United States considering additional tariff expansion which will disrupt worldwide supply chain network.