Shares of auto parts makers tumbled on Thursday after United States President Donald Trump imposed a 25% tariff on foreign automakers. The tariff, which applies to components from May 3, is a response to alleged unfair trade practices by countries like India, Vietnam and more.
Indian auto parts manufacturers are reeling from the proposed tariff, a figure significantly higher than the anticipated 15% reciprocal levy. The expected reciprocal figure was based on India's maximum 15% import duty on US auto parts.
Adding to the industry's concerns is the US President's separate announcement of a 26% duty on all Indian imports, despite India's weighted average tariff of 12% on US good. Trump also declared a 10% baseline tariff on all countries.
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. For Sona BLW, 40% of its revenue comes from the US. That figure stands at 35% and 18% for Bharat Forge and Motherson Group, respectively.
Auto Makers Share Prices Drop
As of 10:19 a.m., when the benchmark Nifty 50 was trading 0.29% lower, Bharat Forge Ltd. fell 3.29%, while Samvardhana Motherson International Ltd. followed suit, dipping 2.21%. Sona BLW Precision Forgings stock price fell 1.86%.
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