3rd April, 2025
With the President of the United States imposing a minimum 26% levy on all Indian imports beginning April 9, the impact on Indian original equipment manufacturers in the auto sector is expected to be minimal, according to leading experts who spoke with EV Story.
One reason for this assessment is that India’s passenger and commercial vehicle exports to the United States are relatively small, accounting for only 0.13 percent and 3 percent of total exports, respectively. According to industry analysts, India’s passenger car exports to the United States will total $8.9 million in 2024, accounting for only 0.13 percent of total car exports of $6.98 billion.
According to Crisil Intelligence, exports account for only 15% of India’s automotive production, leaving domestic component manufacturers with only 4.2 percent exposure to the US market. When considering the tariff-affected components, this exposure is reduced to 3.5% of annual auto component revenue, limiting the potential impact.
“The limited export volume to the United States will help protect component manufacturers’ revenue. However, price increases in the United States may reduce the competitiveness of domestic component manufacturers, according to the Crisil report.
Tata Motors is likely to suffer indirect consequences from Trump’s tariff, given that the US market accounted for 33% of sales volume for its luxury vehicle division, Jaguar Land Rover, in the first nine months of FY25 and 23% of revenue in FY24.
In contrast, India’s auto component exports to the United States account for one-third of total industry exports, totaling $21.2 billion. However, India’s share of the US auto component import market is only 2%, far behind Mexico’s 39%, Canada’s 13%, and China’s 12%.
The new tariff may also have an impact on companies like Sona BLW Precision Forgings, which derives 40% of its revenue from the US market, and Bharat Forge and Motherson Group, which receive approximately 30% and 18%, respectively. Although the tariff is expected to have little impact on India’s economy, experts warn that widespread trade volatility could lead to further rupee depreciation and a worsening current account deficit.
According to global experts, U.S. consumers will bear the brunt of President Trump’s initiative to “Make America Wealthy Again,” as they may face higher costs when purchasing renowned British brands.
While Trump referred to Prime Minister Narendra Modi as a “great friend,” he highlighted the tariff disparity, saying, “They (India) are charging us 52%, and we have charged almost nothing for years, years, and decades,” implying that the new tariff structure is intended to address this imbalance.
The trade deficit between the United States and India is currently $46 billion, and President Trump has stated that these tariffs will remain in place until what he calls a ‘threat’ is resolved.
In his speech, Trump claimed that India imposes excessively high tariffs on American goods, whereas the US has been relatively accommodating for many years.
“India is very, very tough. Very, very tough. The Prime Minister just left. You’re my friend, but you’re not treating us fairly. They impose a 52% tariff on us. “You have to realize that we have charged them almost nothing for years, if not decades,” President Trump said.
