How Trump’s Upcoming Tariff on Semiconductors Will Impact India’s Automotive Sector

US President Donald Trump recently announced upcoming tariffs on semiconductor imports. He mentioned that these tariffs would not heavily impact companies like Apple, which are ramping up production in the US. Trump’s comments suggested that these tariffs would be “fairly substantial,” although he gave no specific rates.

Impact on Indian Automakers

The potential tariffs could shake up the auto sector in India. Currently, the country faces a 50 percent tariff on US products, partly because of its purchases of Russian oil. Analysts warn that Trump’s tariffs might disrupt the global supply chain, especially for industries relying heavily on semiconductors. Justin Khoo, a senior market analyst, highlighted the Indian automotive industry’s vulnerability due to its reliance on imported chips.

India’s auto sector saw a 19 percent boost in exports, totaling over 5.3 million units in the 2024-25 fiscal year. This surge was mainly driven by strong demand for passenger vehicles and two-wheelers. However, chip shortages have already caused significant production issues, with an estimated 300,000 units lost in just the last fiscal year.

Electric vehicle (EV) manufacturers, in particular, are at risk. These vehicles depend heavily on semiconductor chips for various functions. As the supply chain faces further strain, costs could rise, negatively impacting profit margins. Companies like Bharat Forge and Samvardhana Motherson have raised concerns about their US exports, citing tough market conditions due to these new tariffs.

A Broader Picture

Experts point out that corporate giants like Tata Motors may face indirect challenges as rising operational costs could trickle down through the supply chain. The combination of rising costs and ongoing semiconductor shortages paints a challenging picture for the future of India’s automotive industry.

Conclusion

As Trump moves forward with these tariffs, it’s clear that the Indian auto sector must prepare for implications that could affect supply chains, costs, and competitiveness. Keeping an eye on these developments will be crucial for stakeholders in the industry.

For additional insights into semiconductor tariffs and their potential impacts, you might want to check recent reports from the Society of Indian Automobile Manufacturers.

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