Trump Announces 25 Percent Tariff For India: How Will It Impact Auto Industry?

US President Donald Trump has announced a 25 percent tariff and penalty on exports from India, effective August 1. With this, India has become the latest to join the list of countries facing higher tariffs under Trump's "Liberation Day" trade strategy, which aims to restructure American trade partnerships through enhanced reciprocal agreements.

"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.

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"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.