18 hours Ago
Mumbai: Indian steel and automotive companies will face no additional trade barriers over and above the previously announced 25% import duties, according to a fact sheet published by the White House shortly after US President Donald Trump announced reciprocal tariffs of 26% on Indian goods on Wednesday. Steel and aluminium articles, and automobiles and auto parts, on which Trump earlier announced blanket 25% tariffs, would be exempt from Wednesday’s reciprocal tariffs, the White House said. Also read: Indian pharma companies escape Trump’s reciprocal tariffs, for now However, existing concerns remain.
While India’s automobile exports to the US are negligible, the country is a significant destination of Indian-made auto parts. India is estimated to export about $6.8 billion in auto parts to North America, as per the Automotive Component Manufacturers Association of India (ACMA).
The bulk of these shipments go to the US. The 25% levy on auto parts that kicks in from 3 May could prove to be a dampener for Indian exporters. However, given the tariff is uniform across countries, trade is unlikely to shift from India to elsewhere immediately.
Trade relationships in the auto industry also tend to be sticky. It is not easy for an automaker to switch parts suppliers on short notice, given the complexity of their supply chains and the time it takes to validate and bring on board new suppliers. Also read | Trump’s tariff strike: India hit with 26% duty as trade war escalates A larger concern for the Indian industry is that in due course, larger suppliers of auto parts such as China may shift their exports elsewhere from the US, including to India, potentially eating into the business of domestic parts suppliers.
Similarly, India’s steel and aluminium imports to the US are negligible, too, but concerns over China redirecting its excess production to India has the industry worried. Meanwhile, American automakers are lobbying for an exemption on tariffs for key parts such as engines, Bloomberg reported. Tesla chief Elon Musk, a staunch ally of US President Trump, said earlier on X that the tariffs would have a significant impact on his electric car company, given that it buys parts from overseas.
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