Tata Motors, ancillary shares fall up to 2% as Trump's tariff on car imports kick in

Reciprocal tariffs is clearly driven by a desire to boost US manufacturing.

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26 Aug, 2025 12:21

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Shares of auto component makers as well as Tata Motors were the worst-hit among mobility companies on April 3, fearing the worst impact of the reciprocal tariffs announced by US President Trump.

In a press briefing, Trump announced that automobiles made outside the country will be charged 25 percent tariffs. "Effective at midnight, we will impose a 25% tariff on all foreign-made automobiles." The levy had been announced on imported cars and light trucks last week.

Hyundai shares tumbled nearly 2 percent to close at Rs 1,647, while those of Tata Motors were down over 2 percent to close at Rs 656 apiece.

Tata Motors is likely to bear the maximum impact of the tariffs, as its luxury subsidiary Jaguar Land Rover (JLR) has deep exposure to the American market. JLR sold over 4 lakh units globally in FY24, of which about 23 percent were sold in US alone.

"The US alone contributed over a fifth of JLR's total revenue last year, making it a crucial market. With limited options to maintain margins and meet prior guidance, JLR will likely resort to price hikes and cost efficiencies. However, these strategies won’t yield immediate results, and a near-term hit to both revenue and profitability is expected," said Nirav Karkera, Head of Research at Fisdom.

"If JLR can raise prices proportionally, the revenue impact will be minimal. However, if demand falls due to higher prices, both sales volume and margins will suffer,” said Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal in a conversation with Moneycontrol.

Also Read: Will Indian carmakers, ancillary companies face a speed bump? Tata Motors likely to bear maximum impact

The selloff in auto stocks pushed the Nifty Auto index down nearly a percent, with ancillary companies like Sona BLW Precision, Bharat Forge, and Samvardhana Motherson (SAMIL) among the worst hit. Sona BLW Precision Forgings was down over a percent while the shares of Bharat Forge and Samvardhana Motherson were down up to 3 percent in early trade on April 3.

While announcing the tariffs, President Trump said, "The European Union charges us more that 10 percent tariffs, and they have 20 percent VAT, much much higher. India charges 70 percent or perhaps, worst of all, the non-monetary restrictions imposed by South Korea, Japan and many other nations as a result of these colossal trade barriers, 81% cars in South Korea are made in Japan, 94% of the cars in Japan are made in Japan."

He added, "Toyota sells one million foreign-made automobiles in the US and General Motors almost sells none. Ford sells very little. None of our companies are allowed to go into other countries."

"In many cases, the friend is worse than foe in terms of trade. Such horrendous imbalances have devastated our industrial base, and put our national security at risk. I don’t blame these countries at all for the calamity, I blame the previous presidents and past leaders who weren’t doing their job, letting this happen to an extent that no one could believe," Trump further added.