Motor Equipment Manufacturers Association (MEMA) of USA, the counterpart of Automotive Component Manufacturers Association of India (ACMA) has said that a 25 per cent tariff will apply to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as critical auto parts (engines, transmissions, powertrain components, and key electrical parts).
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However, it has also said that while vehicle tariffs will take effect from April 3 at 12:01 a.m. EDT, the parts tariff date is pending but will be no later than May 3, 2025.
Also, the 25 per cent tariff will not apply to parts qualifying under United States–Mexico–Canada Agreement (USMCA) until a process is established to apply it only to the non-US content of those parts.
“The scope is dependent on the list of automotive parts and vehicles that will be published in Annex I of the Federal Register in the coming days,” it added.
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Auto component makers fear US tariffs will hit their revenues
25% tariff may dent the operating margins by 120-150 basis points
Based on the connection to Proclamation 9888 (Adjusting Imports of Automobiles and Automobile Parts Into the US), the scope is expected to include: passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans and cargo vans) and light trucks and certain automobile parts (engines and engine parts, transmissions and powertrain parts, and electrical components), it said.
According to ACMA, the exact impacted items (parts) will be known only once the exact list of auto components is announced.
India exports engines and engine parts, transmissions and powertrains worth around $5.5 billion to the US, while the import from the US is around $1 billion only.
Indian industry experts warn that the tariffs, expected to take effect from May, will compress operating margins and revenues, as exports form a crucial part of the sector’s earnings.
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Auto component makers fear US tariffs will hit their revenues
25% tariff may dent the operating margins by 120-150 basis points
“The tariff is expected to dent the operating margins of auto parts makers by 120-150 bps. Approximately one-fifth of India’s auto component sector revenue is derived from exports. Of this, 27 per cent is to the US market alone,” said Anuj Sethi, Senior Director of Crisil Ratings.
