No Roadblocks! Trump’s Auto Tariffs Won’t Dent India’s Car Sector: GTRI

Donald Trump 25% Tariff: US President Donald Trump has imposed a 25 per cent import duty on completely built vehicles and auto parts from April 3, 2025. According to the think tank GTRI, on Thursday it stated that the implications of these tariffs remain limited for India's auto industry and may even present an opportunity for domestic exporters

"An analysis of India's auto and auto component exports in calendar year 2024 suggests that the impact of these tariffs on Indian exporters will be minimal." Global Trade Research Initiative’s Founder, Ajay Srivastava was quoted as saying by news agency PTI.

Impact on Passenger Cars:

In the passenger car segment, the think tank GTRI stated that in 2024, exports from India were $8.9 million worth of vehicles to the US. Further, this was only 0.13 per cent of the country's total exports of $6.98 billion. Srivastava also said this nominal exposure suggests the taxes will have no tangible effect on the country’s booming car export business and in other categories too, and further, the US exposure is either low or manageable.

Truck Exports to the US:

The exports of trucks to the US, were at $12.5 million, which represented about 0.89 per cent of India's global truck exports and these figures ensure a limited vulnerability.

However, it said, there can be some influence likely in car chassis that are fitted with engines, where America accounted for $28.2 million of India's $246.9 million in global exports, which stands to be 11.4 per cent.

"The segment that warrants the most attention is auto parts. India exported USD 2.2 billion worth of auto parts to the US in 2024, comprising 29.1 per cent of its global auto part exports. While this initially appears concerning, a closer look reveals a level-playing field," GTRI’s Srivastava was quoted as saying by news agency PTI.

Auto Parts Imports of the US:

In 2024, the US imported $89 billion worth of auto parts globally. Mexico has accounted for $36 billion, China for $10.1 billion, and India for just $2.2 billion. Since the 25 per cent tariffs apply across the board, all exporting countries will face the same hurdle.

In this context, he said, India's auto component industry may even find an opening.

"With its competitive advantage in labour-intensive manufacturing and competitive India's import tariff structures (ranging from zero to 7.5 per cent), India could increase its market share in the US over time," GTRI’s Srivastava was quoted as saying by news agency PTI. He further said rather than retaliating, the Indian government should view the tariff move as a neutral or even mildly advantageous event in the long term. Srivastava added that India's sector remains largely insulated.

With minimal direct exposure in most categories and potential upside in auto parts, there is little reason for India to counteract, Srivastava said.

He further suggested that any lowering of taxes by India to avoid taxes on passenger vehicles would be ineffective.

Citing an example of Australia, Srivastava said, that when Australia reduced its import tariffs from 45 per cent to 5 per cent in the late 1980s, it paved the way for the eventual collapse of its domestic auto manufacturing industry.

"With the Indian auto sector contributing nearly one-third of the country's manufacturing GDP, any similar misstep must be avoided. Preserving the stability of the Indian auto sector is vital," GTRI’s Srivastava was quoted as saying by news agency PTI.

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