Explained: How 25% Tariffs on Auto Imports Affect Indian Manufacturers?
US President Donald Trump announced a 25% tariff on imported cars and parts from April 3, 2025 and it is set to impact finished cars and trucks, as well as imported parts that are assembled in the US.
Explained: How 25% Tariffs on Auto Imports Affect Indian Manufacturers?

US President Donald Trump announced a 25% tariff on imported cars and parts from April 3, 2025 and it is set to impact finished cars and trucks, as well as imported parts that are assembled in the US. “According to our US Autos team, 1) the impact of these tariffs could be $3,700 (~8 per cent of ASP). With a 50 per cent pass on (4 per cent price hike), this could impact demand by 8 per cent or ~1 million vehicles (~16 million new car sales in 2024); and 2) these tariffs further Trump’s objectives to lessen reliance on China, address Chinese investments in third countries to circumvent tariffs, and incubate the redevelopment of the US manufacturing base,” an analysis report by Nomura stated.
Details about the developments
As per the recent developments, a 25% tariff would be levied on all fully-built light vehicles imported into the US from 3 April onwards. Additionally, imports of engines, transmissions and powertrain parts, electrical components are also subject to a 25% import duty no later than 3 May 2025.
What’s the exposure of Indian manufacturers in the US?
In FY24, about 23% of Jaguar Land Rover’s revenue and 26% of the total wholesale volumes came from the US. Jaguar Land Rover is the subsidiary of Tata Motors. In the nine months of FY25, JLR’s volume exposure in the US surged to 33%.
Auto parts manufacturers including Bharat Forge, Sona Comstar and Samvardhana Motherson have a significant exposure to the US market. In FY24, 25% of the consolidated revenue and 35% of the standalone revenue (28%/37% in 9MFY25) came from the US. Sona Comstar’s 40% revenue came from the US (43% in 9MFY25). Meanwhile, Samvardhana Motherson’s around 18% revenue came from the US. Samvardhana Motherson already has a manufacturing facility in the US, which could help the manufacturer to offset the potential risks.
Can US cars be impacted?
As per Nomura, the immediate impact of tariffs could lead to significant price hikes by OEMs, as they will take time to explore alternatives. This can have a negative impact on the demand as well.
It should be noted that not all the companies will be able to shift their manufacturing base to the US. Average hourly wage in India is $1.5 vs $2.5 in Mexico and $15 in the US. For shop floor workers, wages in the US are around 5x compared to that in India. Nomura said , “If all OEMs and suppliers plan to shift their production to the US at the same time, there may be a shortage of labour, leading to a further rise in wages. Suppliers can currently supply to US OEMs at a lower cost due to scale benefits in locations outside the US, which may not be feasible if they set up their manufacturing plants in the US itself.”
Additionally, Nomura said, “any sharp rise in tariffs across other consumer products may impact inflation, raise interest rates and affect US consumer sentiment. According to the recent news reports, US consumer sentiment has already hit a 12-year low.”