India’s Auto Sector Faces Headwinds as US Tariffs on Components and Tyres Bite

New US tariffs are set to severely impact India’s auto sector, particularly affecting tyre and component exports. A 25% tariff hike, starting August 27, brings the total duties on Indian exports to around 50%. This will weigh heavily on MSMEs, which are crucial to India’s export economy. The auto component industry, estimated at $80.2 billion, will likely experience margin pressures and slower exports, potentially leading to supply chain shifts. Section 232 of the US Trade Expansion Act covers these components, mandating a 25% duty on items like engines and drivetrains, and a 50% duty on others. The tyre sector is especially at risk, with the replacement market being the most vulnerable. Jaguar Land Rover is likely to feel the impact. These tariffs could undermine India’s efforts to benefit from the ‘China+1’ strategy.