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Donald Trump announces 25% tariffs on imports of cars and components into US


As per media sources, President Trump proposes to impose 25% tariffs on passenger cars and LCV imported into US as part of its ongoing trade negotiations with major trading/business partners.
The tariffs, slated to take effect on April 2, apply to both finished vehicles shipped into the US and to imported parts used in American assembly plants.
From the OEM standpoint, US is not a major destination for vehicles exported from India. So this will not have any meaningful impact on domestic OEM’s except Tata Motors.
North America (largely US) is a very important market for Tata Motors overseas luxury PV arm i.e. JLR. Its share in volumes is pegged at 33% (wholesales at 94k units amidst total wholesales of 290k) and is the key growth region for the company amidst overall muted demand in other regions.
This is sentimentally negative for JLR and Tata Motors, however we expect the tariffs to be much lower than proposed and will largely be taken care by the trade deal negotiations between US and EU block. With muted growth prospects across all its segments namely JLR, India CV & PV, Tata Motors lacks triggers for stock price appreciation in the near to medium term. We consequently, have a HOLD rating on Tata Motors and value it ₹ 780 on SoTP basis (10x/2x EV/EBITDA to India/JLR business on FY26E).
However, this could turn out to be negative for the auto ancillary space as US is a sizeable trading partner with India.
US accounts for 27% of total auto components exported from Indian at US$ 5.7 billion (total exports at US$ 21.2 billion).
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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