Trump Announces 25 Percent Tariff For India: How Will It Impact Auto Industry?
"Remember, while India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country," US President Donald Trump said on a social media platform.
Also Read: Tata Motors To Acquire Iveco In $4.3 Billion Deal, Eyes European Expansion
"Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of Energy, along with China, at a time when everyone wants Russia to stop the killing in Ukraine - All things not good. India will therefore be paying a tariff of 25 percent plus penalty for the above, starting August 1st," he added.
Impact of Trump's Tariff on Auto Industry
The United States is the largest market for auto parts exported from India. In the financial year 2025, India sent components worth $7.35 billion to the US, marking an 8.4 percent increase compared to the previous year. Meanwhile, the value of auto component imports from the US to India stood at $1.65 billion.
Hence, experts believe the tariff could affect margins of auto component manufacturers like Sundaram Fasteners, Samvardhana Motherson, Sona Comstar, and others. Furthermore, it might affect their position against suppliers from competitive markets like Canada, Japan, and others.
Furthermore, the OEMs exploring possibilities of exporting to the US market might also be pushed to improve their presence in other markets like Europe. The list includes major two-wheeler manufacturers like Royal Enfield, Honda, and others seeking to take advantage of motorcycle demand in the American market.
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Sectors such as agriculture, dairy and automobiles, continue to be protected, even as the Ministry of Commerce and industry maintains that its trade measures are WTO compliant. Unlike its response during Trump's first term, where retaliatory tariffs were imposed, New Delhi has desisted from retaliating and is working on strategic concessions in sectors that the US is keen to target, while adhering to its own broad red lines. This involves areas symbolic of trade openness, including nuclear energy, fossil fuels and defence procurement. Think tanks such as Delhi-based Global Trade Research Initiative have said that by refusing to cross its red lines, particularly on agriculture, India has helped avoid 'the trap of a one-sided deal'. Once the official level discussions wrap up, there is a sense that a final call on the deal could come down to a conversation between the two leaders, Prime Minister Narendra Modi and Trump. This is especially so since it is Trump who is the trade negotiator-in-chief. For India, the best-case scenario would be to get a deal of some sort now, and then build on that in the future negotiations that could run into 2026, experts said. With Trump announcing the tariffs and penalties on India, that phone call could come in sooner, they said. Anil Sasi is National Business Editor with the Indian Express and writes on business and finance issues. He has worked with The Hindu Business Line and Business Standard and is an alumnus of Delhi University. ... Read More
