CarOnPhone Car News TRUMP’s TAX TARIFF effect on Indian sectors Automobiles, Key highlights, List of reciprocal tariffs and Auto Industry Reactions
CarOnPhone Car News TRUMP’s TAX TARIFF effect on Indian sectors Automobiles, Key highlights, List of reciprocal tariffs and Auto Industry Reactions

TRUMP’s TAX TARIFF effect on Indian sectors Automobiles, Key highlights, List of reciprocal tariffs and Auto Industry Reactions

Akash Patil

05 Apr 2025, 01:24 PM

  • The 25% import tariff will unruffle the feathers of the auto component sector, Automobile analysts have a different take on the tariffs believing this could be an opportunity to storm the U.S. electric vehicle segment.

TRUMP's TAX TARIFF effect on Indian sectors Automobiles, Key highlights, List of reciprocal tariffs and Auto Industry Reactions

Donald Trump announced a 25% tariff on vehicles not assembled in the US, effective April 3. Auto parts exports from India may see a slight slowdown as US President Donald Trump’s 25 per cent tariff could increase car prices for buyers by 8–25 per cent, thereby affecting demand. Even foreign-made components used in vehicles assembled domestically will be subject to these tariffs, complicating the supply chain for many automakers.

Morover, global auto majors believe a possible free trade deal resulting from the Trump tariff could create a win-win situation for both domestic and international players.

The Trump government’s reciprocal tariffs have been revised for at least 14 countries, including India.

The move, he claimed, was necessary to revive American manufacturing and correct what he called “horrendous imbalances” in international trade.

US President Trump also highlighted differences in the automobile industry. “Until today, the United States has for decades charged a 2.5 per cent tariff on foreign-made automobiles. The European Union charges us more than 10 per cent, and they have 20 per cent VATs—much, much higher.”

Key Highlights

  • 25% Tariff On Autos – President Trump’s announcement of a 25% tariff on foreign automakers. The tariff is applicable on auto components, unassembled vehicles and fully imported cars, according to the declaration.
  • US Tariffs Not Fully Reciprocal – President Trump stated that the newly imposed tariffs on foreign automakers would not be fully reciprocal, clarifying that “we will charge them approximately half of what they charge.”
  • During the announcement in the White House Rose Garden, Trump emphasised the U.S. is being fair by charging countries half of what they impose on American goods; India currently levies a 52% tariff on U.S. imports.
  • Trump accused India of currency manipulation and trade restrictions, justifying the new tariff as a necessary countermeasure.
  • According to ACMA, India exports around $6.8 billion in automobile components to the North American market. Initially, this may pinch the companies, but as the 25% tariff is standard across the globe, it is highly unlikely that the manufacturing facilities would shift out of India.
Trump Tariff News Live: ‘Don’t see any significant impact on Indian auto industry,’ says SIAM
The Indian automobile industry does not expect to have any significant impact from US President Donald Trump’s reciprocal tariff announcement, as autos are not covered in it and exports to the US are limited, industry body SIAM said

List of reciprocal tariffs announced by Trump:

  1. China: 34 per cent 
  2. European Union: 20 per cent 
  3. South Korea: 25 per cent 
  4. India: 26 per cent 
  5. Vietnam: 46 per cent 
  6. Taiwan: 32 per cent 
  7. Japan: 24 per cent 
  8. Thailand: 36 per cent 
  9. Switzerland: 31 per cent 
  10. Indonesia: 32 per cent 
  11. Malaysia: 24 per cent 
  12. Cambodia: 49 per cent 
  13. United Kingdom: 10 per cent 
  14. South Africa: 30 per cent 
  15. Brazil: 10 per cent 
  16. Bangladesh: 37 per cent 
  17. Singapore: 10 per cent 
  18. Israel: 17 per cent 
  19. Philippines: 17 per cent 
  20. Chile: 10 per cent 
  21. Australia: 10 per cent 
  22. Pakistan: 29 per cent 
  23. Turkey: 10 per cent 
  24. Sri Lanka: 44 per cent 
  25. Colombia: 10 per cent

Auto Industry Reactions Srikumar Krishnamurthy, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA Ltd:

“The US Government has imposed a 25% tariff on passenger vehicles and light trucks. As the PV exports from India to the US represent less than 1% of the total PV exports, the imposition of the tariff does not have any material impact on the Automotive OEMs. The scenario is however different for auto components”

“Auto components have not featured in the latest set of additional tariff announcement. India’s auto components exports accounted for 29% of industry revenues in FY2024. Of this, 27% was to the US. While the situation is evolving, the recent tariff related development and the consequent inflationary pressures and slowdown in demand in the US could have a negative impact on revenue and earnings for component exporters (in the affected product categories) over the next few months. Nevertheless, with higher tariffs being levied on other competing nations, this could also create long-term opportunities for the exporters. Exporters dependent on the US are also trying to diversify their revenue base across other geographies (including Asia). Measures to improve value addition, diversification into non-auto segments and cost-optimisation strategies are also being worked upon to reduce the potential impact on margins.”

Shradha Suri Marwah, President, Automotive Component Manufacturers Association of India:

“It is to be noted that autos & auto parts and steel & aluminium articles, already subject to Section 232 tariffs at 25%, announced earlier in President Trump’s order on March 26, 2025, are not covered in the aforementioned order. The detailed list of auto components that will be subject to 25% import tariff in the US is however awaited.”

“ACMA remains hopeful that the ongoing bilateral negotiations between the Indian and U.S. governments will lead to a balanced resolution that benefits both economies. We believe that the strong trade relationship between India and the US, especially in the auto components sector, will encourage continued dialogue to mitigate the impacts of these measures.”

Arun Agarwal, Vice President Research, Kotak Securities:

“This move could result into increase in car prices in the US and cost pressure for component suppliers. In the event of car prices going up, the US car market may witness a steep volume decline and that can impact revenue for component players supplying parts to the US car/light truck industry. Further, margins of suppliers may come under pressure as they may need to partly absorb cost pressures. We believe there will be some impact, which the suppliers will have to bear. Having said that, it needs to be seen on how higher tariffs are absorbed across the supply chain that includes customers, OEMs and suppliers. The extent of impact for Indian players will also depend on the US-India bilateral agreement over the next few months.”

Saurabh Agarwal, Partner and Automotive Tax Leader at EY India:

“With US automotive tariffs rising, India’s electric vehicle sector has a prime opportunity to capture a larger share of the US market, especially in the budget car segment. China’s 2023 auto and component exports to the US stood at $17.99 billion, while India’s were only $2.1 billion in 2024, highlighting the potential for growth. To accelerate this, the government should enhance the PLI scheme by including more auto components, opening it to new players, and extending it by two years.”

From Samvardhana Motherson International Ltd:

“A significant part of the products supplied by the Company and/or its subsidiaries to its various customers in the U.S are either manufactured in the U.S. or are United States-Mexico-Canada Agreement (USMCA) compliant and therefore as per our present assessment the said Executive Orders may not have any material impact on the financials of the Company. However, impact (if any) going forward depends on various inclusion(s) / exclusion(s) of product(s), component(s), territories(s), tariff(s) etc., forming part of said Executive Orders, as may be notified or amended.”

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