Trump's auto tariffs: Nearly 16% of India's car, component exports headed to the US in 2023

India less vulnerable to US auto tariffs

US President Donald Trump’s tariffs on cars, auto components and light commercial vehicles (LCVs) are unlikely to impact India as much as markets like Mexico, Canada, South Korea and the European Union, as the country’s dependency on the United States is low, according to a Moneycontrol analysis.

On March 26, Trump announced 25 percent tariffs on all imports of cars, auto components and light commercial vehicles headed to American shores.

In 2023, the US accounted for nearly 16 percent of India's exports of auto items, while the dependency for Mexico and Canada, which has called the latest Trump tariff announcement as a "direct attack" on the country, was more than 80 percent and that of the EU was 21 percent.

Korea and Japan, among the US’ top exporters of auto and auto components, had a dependency of 44 percent and 34 percent.

All these countries will take a hit when the tariffs kick in.

"We're going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of the things that they've been taking over the years," Trump said as he made the latest tariff announcement.

“Anybody who has plants in the United States, it’s going to be good for,” Trump, who has already unleashed a similar levy on steel and aluminium products, said in the White House.

The auto levy is expected to kick in from April 3, a day after Trump is expected to make the the reciprocal tariff plan public, which is expected to hit American trading partners, including India.

The US accounts for over $350 billion, nearly a fifth, of global imports of cars, car parts and LCVs.

In 2023, the latest year for which data is available, India was the eleventh largest supplier of auto and auto components to the US, also trailing the United Kingdom, Italy, Sweden and the Slovak Republic, with exports amounting to $2.5 billion.

In 2023, India exported $16.5 billion worth of these items globally. But not all Indian exports to the US may be shielded from higher duties. In terms of auto components, 29.2 percent of India’s exports were headed to the US, while its dependence on the US for items like valves, piston rings, pistons was 23 percent.

For diesel engine parts, India’s dependence on the US for its exports was even higher at 31.4 percent.

India has found new auto markets since the coronavirus pandemic but its dependence on the US for export of these items is higher from what it was a decade ago.

While the US had only a 10.6 percent share of auto exports from India, this rose to 20 percent before the pandemic before settling at  15.7 percent in 2023.

US duties are expected to affect other imports indirectly. Auto component exports to US’ top four suppliers were $847 million or 9 percent of India’s global exports of such items in 2023.