 "New vehicles are parked on the pier in Baltimore, Maryland. Experts note that India's auto sector will be relatively insulated from Trump's levies. File image/AFP")
US President Donald Trump’s decision to raise tariffs on auto parts from India is expected to significantly impact the country’s export industry, experts warned. It is pertinent to note that nearly half of India’s $7 billion auto parts exports to the US will be affected.
The United States already had duties on cars and auto parts. However, this additional tariff is expected to impact India’s auto sector immensely. Trump’s wrath comes as retaliation for India’s oil imports from Russia amid the Ukraine war.
On Wednesday, Trump signed an executive order introducing additional 25 per cent tariffs on Indian goods. While speaking to The Economic Times, senior industry experts say that these tariffs would impact nearly half of the country’s $7-billion, or about ₹61,000-crore of annual auto parts exports to the US.
India’s auto industry takes the hit
Before this, the US was already levying a 25 per cent duty on cars, small trucks and their parts from all countries since May 3. However, at that time, tariffs on components for commercial vehicles, earth-moving equipment and tractors were 10 per cent. Things changed with the latest announcement, with tariffs now rising to 50 per cent on Indian auto part components.
“While the tariffs levied this year now impact component exports across categories, today’s announcement specifically will hit nearly half of the total exports business to the US,” one of the executives told The Economic Times.
What makes the rise in tariffs concerning is the fact that the US is the largest destination for Indian auto parts , accounting for about 32 per cent of total shipments from the country in FY25. Meanwhile, India does not export vehicles to the US.
India, on the other hand, levies customs duty of 5-15 per cent on auto parts imported from the US. Initially, Trump had said higher tariffs would push companies to set up manufacturing plants within the US, which would ultimately create more jobs.
Impact Shorts
View AllHe also claimed that Indian oil imports from Russia are undermining US National Security and foreign policy amid the ongoing national emergency related to Russia’s actions in Ukraine.
With inputs from agencies.