Shares of Tata Motors fell nearly 3% on Thursday after higher U.S. tariffs on foreign-made automobiles, announced by the Trump administration last week, came into effect.
The stock declined as much as 2.58% to ₹654.50 on the Bombay Stock Exchange (BSE) during the session, as investors weighed the potential impact on Tata Motors’ luxury car subsidiary, Jaguar Land Rover (JLR).
The new tariffs, effective from midnight on April 3, impose a 25% duty on imported passenger vehicles, including sedans, SUVs, and key auto parts sourced from outside North America. A separate tariff on critical auto components such as engines, transmissions, and powertrain systems will be implemented no later than May 3, according to a White House statement.
While India does not export significant volumes of cars to the U.S., JLR relies heavily on the American market, which accounted for about 23% of its over 400,000 unit sales in fiscal 2024. All of these vehicles were manufactured at its U.K. plants and exported to the U.S.
“The U.S. tariff hikes will impact JLR’s profitability, given that nearly one-third of its sales last year came from the U.S. market,” said Arun Agarwal, VP of Fundamental Research, Automobiles, at Kotak Securities.
Broader market impact
The tariff hike also weighed on other Indian auto and component stocks. Shares of Bharat Forge (BFRG.NS) dropped 4.6% to ₹1,099.40, while Balkrishna Industries (BALK.NS) fell 4.3% to ₹2,453.90. Sona BLW Precision Forgings (SONA.NS) declined 3.6%, and Samvardhana Motherson International (MOTH.NS) shed 3.3%.
Among automakers, Bajaj Auto (BAJA.NS) slipped 2.87%, TVS Motor Co (TVSM.NS) fell 2.08%, Ashok Leyland (ASHOK.NS) dropped 1.9%, and Mahindra & Mahindra (MAHM.NS) declined 1.4%.
The benchmark BSE Sensex (.BSESN) was down 0.39% or 300.98 points at 76,316.46.
India’s auto components exports to the U.S. totaled $6.79 billion in fiscal 2024, while imports from the U.S. stood at $1.4 billion, subject to a 15% duty. Engine components, powertrains, and transmissions were India’s largest exports to the U.S. auto sector.
“Margins of suppliers may come under pressure as they might need to absorb part of the additional costs,” Agarwal added. “The extent of impact on Indian players will depend on future U.S.-India trade negotiations.”
