Tata Motors Shares Drop 7%: How Exposed Is India’s Auto Sector to Trump’s 25% Tariff?

Shares of India’s top automakers declined in early trade after President Donald Trump announced plans to impose a 25% tariff on cars imported into the United States, coinciding with his broader reciprocal import tariff plan.

Among individual stocks, Tata Motors was the worst hit, falling as much as 6.6% to Rs 661 in early trade. Analysts say the American president’s decision would impact Tata Motors the most among Indian automakers.

"Trump’s latest decision to impose a 25% duty on all car imports to the US will impact Tata Motors, which exports a significant number of Jaguar Land Rover (JLR) cars to the US," said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.

By 12:30 PM, Tata Motors’ shares were down about 5.54%. The BSE Auto Index dropped by around 1% or 480 points. Ashok Leyland declined 0.8%, M&M fell 0.57%, and TVS Motors was down 0.03%. Meanwhile, Maruti Suzuki was trading 0.33% higher.

JLR's Exposure to North America

During its third-quarter earnings call, Jaguar Land Rover reported a 25% year-to-date growth in the US market.

"So, looking at a three-quarter period with a 25% rise in wholesales, we’re performing quite well in the US. Our brands, particularly Range Rover and Defender, resonate strongly with US consumers, making it a strong market for us," Jaguar Land Rover CFO Richard Molyneux told analysts in January.

He further noted that the shift between Q2 and Q3 was primarily due to the homologation timing of certain derivatives rather than any deliberate response to tariffs.

What Is Trump’s New Tariff Plan?

"We're going to charge countries for doing business in our country and taking our jobs, taking our wealth—taking a lot of things that they've been taking over the years. They've taken so much out of our country, friend and foe alike. And frankly, friends have often been much worse than foes," President Trump said on March 26.

According to Reuters, the US imported $474 billion worth of automotive products in 2024, including $220 billion worth of passenger cars. Mexico, Japan, South Korea, Canada, and Germany were the largest suppliers.

'Indian Auto Sector Exposure Minimal'

"At first glance, India’s auto sector appears vulnerable to these reciprocal tariffs if imposed at a sectoral level. However, a deeper analysis shows that India’s auto sector is relatively insulated due to the nature of trade between India and the US in this sector," Emkay Global Financial Services stated in a report on March 27.

Their report noted that India exported $2.6 billion worth of automobiles and auto components to the US in FY24, accounting for about 13% of India’s total auto exports of $20.9 billion. Meanwhile, India’s imports from the US stood at only $0.6 billion ( about 8% of total auto imports).

However, cars and motorcycles make up a very small portion of India’s auto trade with the US. In FY24, India exported only $0.2 billion worth of cars and motorcycles to the US while importing just $0.06 billion. The majority of India’s exports to the US consist of auto parts and accessories ($2.1 billion in FY24), while imports of the same stood at $0.5 billion.

Thus, while reciprocal tariffs on cars and motorcycles could be as high as 70%, India barely exports these to the US in the first place, limiting the overall impact on the sector.