The entire world is bracing for U.S. President Donald Trump to reveal the much awaited reciprocal tariffs. India is no different as the automobile sector revs up for 25% tariff on foreign made automobiles and auto components. The White House has confirmed that the new import duties will take into effect on April 2. The tariffs will not take a direct toll on automobile makers as there are no U.S brands that have a manufacturing plant in India and no domestic player exports vehicle to the U.S. It is a different story for auto components as industry analysts valued the U.S. market at $2.6 billion in 2023. According to Crisil, the U.S. market alone accounts to 27% for the Indian auto parts industry.
How will the auto tariffs impact India?
Trump has confirmed that the auto tariffs will get a blanket 25%, which will directly impact the Indian components players. According to Chandrasekar Krishnamurthy – Global Director, Product Management, BorgWarner, the new tariffs will see a slowdown in vehicle sales. “The recent 25% tariffs announced by the U.S. will have significant impact of OEMs and Suppliers. Beyond obvious impacts to vehicle pricing increases and slowdown in demand, as BorgWarner we are working with our customers closely to address this situation.”
The auto sector is eagerly waiting for Trump administration to reveal the finer details of the tariff structure. Krishnamurthy further said, “The impact will definitely be felt, but the magnitude of the impact is to be further determined. There are still a few important details missing in the announcement which will need to be further followed up to obtain the full picture.’
Industry analyst Subhabrata Sengupta, Partner – Avalon Consulting seconds this. He explains, “Some aspects of the new tariffs remain unclear. Among India’s automotive exports, $268 million is attributed to tractors and tractor parts, but the treatment of these items under the new tariff structure remains uncertain. Key export categories include brake linings, gearboxes, radiators, and axles. While it is fairly certain that gearboxes and axles will attract duties, the status of other components is yet to be determined.”
