US Tariffs on Indian Exports to Impact Auto Sector, Especially Tyres and Components

The US government has announced a 25% tariff on Indian exports, effective August 27, bringing the total tariffs to approximately 50%. This significant increase is poised to affect India’s micro, small, and medium enterprises (MSMEs) substantially, which account for nearly half of the country’s total exports. The auto component industry is particularly vulnerable, with around 27% of auto component exports and 17% of tyre exports facing disruption. Components, including engines and drivetrains, will face a 25% duty, while other parts will face a 50% tariff. The tyre sector, with 17% of its exports to the US, is especially at risk. Jaguar Land Rover, a Tata Motors subsidiary, is highly exposed, with a significant portion of its sales and revenue coming from the US market. The tariffs are also expected to hinder India’s gains from the China+1 strategy, which aimed to diversify supply chains away from China.