Impact of US-India Trade Tariffs on Indian Steel and Automotive Companies

In response to US President Donald Trump's announcement of reciprocal tariffs on Indian goods, Indian steel and automotive companies are set to face additional trade barriers. However, steel and aluminium articles, as well as automobiles and auto parts, which were previously subjected to 25% import duties, will be exempt from the new reciprocal tariffs according to a fact sheet published by the White House.

While India's automobile exports to the US are minimal, the country is a significant destination for Indian-made auto parts. India exports approximately $6.8 billion worth of auto parts to North America, with a majority of these shipments going to the US.

The 25% levy on auto parts that comes into effect from May 3 could pose challenges for Indian exporters, despite trade relationships in the auto industry being relatively sticky. Shifting suppliers or redirecting exports may not be easy due to the complexity of supply chains and the time taken to onboard new suppliers.

There are concerns that larger suppliers of auto parts, such as China, may redirect exports to India, affecting domestic parts suppliers. American automakers, including Tesla chief Elon Musk, are lobbying for exemptions on tariffs for key parts like engines.

In conclusion, the impact of the US-India trade tariffs on Indian steel and automotive companies can potentially disrupt supply chains and trade relationships in the industry, leading to challenges for exporters.