Two-wheeler and tractor manufacturers will remain insulated from the 25% auto tariffs announced by President Donald Trump, as the tariffs apply only to passenger vehicles, which includes sedans, SUVs, crossovers, minivans, and cargo vans, along with light trucks. A statement from the White House confirmed that two-wheelers and tractors will not be impacted by the new trade measures.
This exemption comes as a relief to domestic players like Bajaj Auto, which exports KTM motorcycles, and Royal Enfield, which exports its Classic models to the US. Similarly, Mahindra & Mahindra’s high-powered tractors, a key export segment, will remain unaffected by the new tariff regulations. According to Moody’s, vehicle exports from India to the US make up only around 3% of total Indian auto exports, limiting the overall impact of the tariffs.
This means that only Tata Motors’ subsidiary, Jaguar Land Rover (JLR) will be significantly affected. A spokesperson for JLR stated, “We are waiting for further information on President Trump’s announcement of 25% tariffs on all auto imports into the USA and will make a further statement, as appropriate, in due course”.
JLR, which sells popular models such as the Range Rover, Range Rover Sport, Land Rover Defender, and Land Rover Discovery in the US, manufactures these vehicles in the UK and Slovakia. The US is JLR’s largest market, with North America’s share in its global sales increasing from 26% in Q3FY24 to 36% by Q3FY25. In 2024 alone, JLR’s wholesales in the US surged by 32% to 124,609 units, despite the brand’s overall global sales growing by only 4%.
“Close to 31% of JLR’s retail sales come from the US, and with models manufactured in the UK, the company is exposed to higher tariffs,” noted a report by CLSA. “While JLR customers tend to be less price-sensitive than mass-market car buyers, still passing on the full tariff increase may prove difficult. A decline in US demand, which accounts for nearly a third of JLR’s sales, would be credit negative,” Moody’s added in a report released on March 17.
No Indian automaker currently exports cars to the US, but Mahindra & Mahindra has hinted at potential future investments in American manufacturing. In February, M&M’s managing director and CEO, Anish Shah, told Bloomberg TV that the company would consider manufacturing its electric SUVs in the US if it decides to enter that market. When asked about the potential impact of Trump’s tariffs on M&M’s business, Shah had said that local production in the US would be a logical step if the company commits to selling its EVs there. A mail sent to M&M on Thursday remained unanswered till the time of going to the press.
India’s imports from the US in the auto sector remain minimal, with Harley-Davidson being the most notable exception. Ford Motor Company, which exited the Indian market a few years ago, briefly introduced the Michigan-built Mustang in India in 2016 as a fully imported model. However, high taxes and limited demand led to its withdrawal from the market.