In a reversal of his earlier stance, US President Donald Trump is set to sign an executive order relaxing portions of the 25% tariffs imposed on auto parts, specifically those used in vehicles manufactured within the United States. The move is designed to stimulate domestic car production and address growing industry concerns about job losses and spiraling costs triggered by the broad application of tariffs.
However, Indian auto component makers will also be a huge gainer of any such move. This is because the US is their single largest market, accounting for exports worth $6.8 billion annually. On Tuesday, the share prices of auto component firms reflected this optimism. Shares of Sona BLW Precision, which derives nearly half its revenue from the US, rose 6.15%, while Rane (Madras) climbed 3.19%. Others including ASK Automotive, Talbros Engineering, and Craftsman Automation gained between 1–2%.
The announcement regarding relaxation of the duties which were to come into effect from May 3, was made at a White House briefing. Officials stated the relaxed measures will prevent overlapping levies on imported components used in US-based manufacturing. The new rules will also be retroactive, with reimbursements expected for previously paid duties, including those on raw materials like steel and aluminum. Treasury Secretary Scott Bessent said the administration’s objective is to support automakers in creating more US jobs without penalising them for relying on globally sourced parts.
Trump’s auto tariffs had drawn widespread criticism. Analysts had said that without adjustments, the tariffs could add nearly $4,700 to the cost of a new vehicle and cripple competitiveness.
The US auto industry remains heavily reliant on imports. Nearly 50% of vehicles sold in the country are imported, and even among those assembled domestically, only 40–50% of their content is sourced from within the United States.
Indian industry analysts said that in the absence of any such relief, around 150–250 basis points of their margins would have got eroded. “This reversal will help us stay cost-effective without needing to rush risky US investments under demand uncertainty,” said an executive from a leading transmission parts supplier.
Drive transmission systems, steering assemblies, electricals, and engine components are among India’s most exported items to US carmakers. While the relaxed tariffs are good news for direct exports, Indian firms that supply to Mexico or Europe for re-export into the US may still face the full brunt of duties, as the administration has yet to signal flexibility in those cases.