US President Donald Trump announcing a 25 per cent tariff on imported cars and parts from April 3, 2025, will impact finished cars and trucks, as well as imported parts that are assembled in the US. “According to our US Autos team, 1) the impact of these tariffs could be $3,700 (~8 per cent of ASP). With a 50 per cent pass on (4 per cent price hike), this could impact demand by 8 per cent or ~1 million vehicles (~16 million new car sales in 2024); and 2) these tariffs further Trump’s objectives to lessen reliance on China, address Chinese investments in third countries to circumvent tariffs, and incubate the redevelopment of the US manufacturing base,” an analysis report by Nomura stated.
Details of new tariff announced
According to the new announcement by Trump, a 25 per cent tariff would be levied on all fully-built light vehicles imported into the US from 3 April onwards. In addition, imports of 1) engines and engine parts, 2) transmissions and powertrain parts, and 3) electrical components would also be subject to a 25 per cent import duty no later than 3 May 2025. Further, autoparts that comply with USMCA requirements will remain tariff-free until the Department of Commerce sets up a process to determine the value of non-US content in such autoparts.
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Exposure details
In FY24, Tata’s Jaguar Land Rover’s approximately 23 per cent revenue and around 26 per cent of the total wholesale volume came from the US. Recently, Nomura said, JLR’s volume exposure has increased to 33 per cent (9MFY25). JLR’s cars are manufactured in the UK, except for the Defender which is manufactured in the EU (25.9 per cent of US volumes in 9MFY25F).
Among auto components, Bharat Forge, Sona Comstar and Samvardhana Motherson are the major suppliers of auto parts with a significant exposure to the US market. In FY24, Bharat Forge’s around 25 per cent consolidated revenue and 35 per cent standalone revenue (28%/37% in 9MFY25); Sona’s approximately 40 per cent revenue (43 per cent in 9MFY25) and Samvardhana Motherson’s around 18 per cent revenue came from the US.
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