Donald Trump To Impose 25% US Auto Tariff On All Foreign Carmakers

US President Donald Trump has confirmed that he will impose a 25% tariff on all foreign automakers, including those from India. The tariff is applicable on fully assembled cars immediately and then auto components with a month's lag on May 3.

“Effective midnight, the US will impose a 25% tariff on all foreign-made automobiles,” Trump said at the 'Make America Wealthy Again' event at the White House on Wednesday.

The prospect of a 25% levy on auto parts has rattled India's manufacturers since it's more severe than expectations. The industry had estimated they may face about a 15% levy in case the US imposes reciprocal tariffs, given that's the maximum import duty India levies on auto parts from the US.

India Impact

The US is the biggest market for India's auto parts exports, accounting for almost a third of the $21.2 billion industry in the year ended March 31. 

Indian auto component makers such as Sona BLW Precision Forgings Ltd., Samvardhana Motherson International Ltd. and Bharat Forge Ltd. are seen as immediately impacted. While Sona BLW gets 40% of its revenue from the US, that figure stands at 35% and 18% for Bharat Forge and Motherson Group, respectively.

Sure, some of these companies have operations in Mexico and Canada to draw benefits from the North American Free Trade Agreement, or NAFTA, but these countries too are exposed to the 25% US auto tariffs. Relocating manufacturing to the US is expensive, as hourly wages in the US ($15) are much higher than those in India ($1.5) and Mexico ($2.5).

Tata Motors Ltd., meanwhile, is likely to see a second-hand impact by way of its UK luxury unit Jaguar Land Rover. In FY24, the Range Rover maker drew 23% of its revenue and 26% of wholesale volumes from the US. That's increased to 33% in the nine months through Dec. 31, 2025.

India's passenger car exports to the US were only $8.9 million in 2024—or just 0.13% of its total car exports of $6.98 billion, according to the Global Trade Research Initiative.

Global Impact

A shiny new car in the driveway is a rapidly disappearing piece of the American dream alongside an affordable home. The average price of a new car in the US now approaches $50,000, with high interest rates adding to the financial toll.

There are 20 models on the market priced below $30,000, according to Cox, and at least half of them will be hit severely by the new tariffs. Among vehicles assembled in Canada or Mexico, costs would rise by $5,855 on average, according to a recent research report.

“The impact on ‘affordable' vehicles would likely make many of them unviable in the US market,” Cox said in the report.

The US auto tariffs are expected to drive up costs across the industry, raising sticker prices by thousands of dollars. The effects could be particularly pronounced at the low end of the market, with many of the least expensive models from the likes of General Motors Co., Ford Motor Co., Kia Motors and Hyundai Motor Co. being built outside the US.