Trump’s 25 Percent Car Tariff May Jolt Indian Auto Giants; Tata Motors, Royal Enfield, Others Brace For Impact
Trump's 25 percent tariff on foreign car imports may hit Indian firms like Tata Motors, Eicher, and Sona BLW, raising US car prices and disrupting global automakers.2/2
Former US President Donald Trump has announced a hefty 25 percent tariff on foreign car imports, a move that could impact several Indian firms, including Tata Motors, Eicher Motors, Sona BLW, and Samvardhana Motherson.
Impact on Indian Auto Firms
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Many of these companies export vehicle components to Europe, Japan, South Korea, and China, which then supply cars to the US, as reported by Money Control.
Tata Motors: While Tata Motors itself does not export to the US, its subsidiary Jaguar Land Rover (JLR) has a strong presence there. In FY24, JLR sold nearly 400,000 vehicles globally, with the US making up 22 percent of its sales. Most JLR cars sold in America are manufactured in the UK and other international plants, meaning they will now be subject to the 25 percent tariff.
Eicher Motors (Royal Enfield): The maker of the iconic Royal Enfield motorcycles could be affected, as the US is a key market for its 650cc models.
Samvardhana Motherson: This major auto component manufacturer supplies parts to American giants like Tesla and Ford. However, with factories in both the US and Europe, it is better protected from these tariffs.
Sona Comstar: A significant supplier of automotive systems and differential gears, Sona BLW gets 66 percent of its revenue from the US and Europe. To reduce risks, the company is expanding into China, Japan, and South Korea.
Other Indian component makers likely to be affected include Bharat Forge, Sansera Engineering, Suprajit Engineering, and Balkrishna Industries.
How Global Automakers Will Be Affected
The new tariffs will impact all car manufacturers, but some will be hit harder than others.
Tesla: Although Tesla manufactures most of its vehicles in the US, some of its parts come from abroad, including China. CEO Elon Musk admitted that these tariffs will raise costs for Tesla’s cars, as per CBS News.
General Motors (GM): The Big Three US automaker will likely be one of the hardest hit. Only 45 percent of the cars it sells in the US are made domestically, with the rest coming from Mexico and Canada.
Stellantis (Jeep, Chrysler, Dodge, Ram): With 75 percent of its US cars made locally, Stellantis will still face rising costs. A $80,000 RAM truck could end up costing $100,000 due to tariffs.
Ford: Ford is better positioned, as 80 percent of its cars are made in the US. However, imported parts for its US-manufactured vehicles will still be taxed.
Toyota, Honda, Hyundai, and Kia: These Japanese and South Korean automakers export a large number of vehicles and parts to the US, making them particularly vulnerable to these tariffs.
BMW and Volkswagen (VW): German brands like BMW, VW, and Audi manufacture many of their engines and transmissions in Germany and Mexico, meaning the tariffs will hit them hard.
Mercedes-Benz: The automaker sends engines and transmissions from Germany to the US, which will now be taxed.
Could Tariffs Make Cars Unaffordable?
The new tariffs could push car prices 15-20 percent higher for models caught in the tariff crossfire. Even exempt vehicles could see price increases of around 5 percent as manufacturers spread costs.
Trump’s new tariffs are designed to boost US manufacturing, but they come at the cost of higher prices and reduced competition. While some automakers might shift production to the US, others may struggle with supply chain issues and increased costs.
As the global automotive industry adjusts, Indian companies will have to diversify exports and expand production in new markets to stay competitive.
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