Introduction:
There has been some misunderstanding in trading between India and the US after Donald Trump came to power. Currently, both the countries are embroiled in a new trade dispute over tax on auto components. The US’s import tariff of up to 26% is directly impacting Indian exporters.
Now the Auto component related trade conflict has grown so much that India has decided to take this issue to the World Trade Organization (WTO). In this context, the US is saying that no WTO rules will be applicable on it because these tariffs come under national security.
It seems a small dispute but actually it is a part bigger trade vision of both the countries to achieve their individual goal—in which both them aim to reach their trade to $500 billion by 2030.
So, let’s understand this issue in clearly:
Why this matter is important?
What are the demands from both the sides?
What is the impact of this tariff on auto industry of India as well as India’s economy?
What Sparked the Tussle?
The whole dispute started in April 2025 after the decision of United States to impose an import tariff of 25-26% on auto components and vehicles with a official statement that the decision was for “national security” and to protect its domestic industries.
But India did not like this at all. Because if an extra tax of 26% is imposed, then Indian products will become expensive in the U.S. market, and it is almost certain that they will be out of competition. Indian auto component manufacturers export goods worth $6–7 billion every year and a large portion of which goes to the U.S.
So, India has raised this issue before the WTO (World Trade Organization), where India says these tariffs are unfair and against the rules of the WTO’s “safeguard agreement”.
So basically, India wants from U.S. to take back this extra tax, while the U.S. wants from India to reduce tariffs from dairy, whiskey, corn, etc. This is why this whole trade has become a tussle.
The Negotiation Deadlock?
Despite several rounds of negotiations, no final solution has been reached yet between Indian and US trade officials. Both are still discussing their respective sides’ demands.
India’s demand
India wants:
The U.S. government should remove the heavy import duty of 26% on auto components and along with this also give some relief on steel, aluminum, and farm products (like rice or spices).
What is the U.S. saying?
The U.S. is saying that:
India should first reduce its high import duties on American dairy products, corn, soy, whiskey, and automobiles. The US believes that its exporters are suffering losses because India’s tariff policy is protectionist.
WTO angle
India has filed a complaint against the U.S. before WTO officials by saying that the tariffs are against “safeguard rules” whereas the U.S. official is saying that their action is based on “national security” which does not fall under WTO rules. Both India and U.S. have stuck to their guns and that’s why the negotiation is stuck in a deadlock.
This dispute can get more complicated if the issue is not resolved by July 9. Then India can go to the dispute panel of WTO.
Tariff effect on listed Indian company
Due to imposed of high import tariff of 26% on auto components by U.S., some Indian listed companies — especially auto parts export company to the U.S. market has directly impacted. Here are some major companies that could be affected by this policy:
- Bharat Forge Ltd
It is a leading auto component manufacturer and it exports engine parts and chassis components to the U.S.
If high tariffs continue, Bharat Forge’s revenue from the U.S. may slow down, putting pressure on profit margins.
- Sundram Fasteners Ltd.
The company exports many auto fasteners and industrial parts to the U.S. Due to tariff, the company may postpone or cancel orders, which can affect the stock price and its future perspective.
- Motherson Sumi Wiring (Samvardhana Motherson Group)
Samvardhana Motherson Group have a strong presence in the global supply chain, and they are key exporter of U.S. market. Due to tariff their logistics and pricing strategies could impact.
- Endurance Technologies
This company makes suspension, braking and transmission systems. Due to U.S. tariff their export costs will increase, which could impact their competitiveness.
- Bosch Ltd. (India)
Although Bosch is presence world-wide. But its Indian operations also supply the U.S. market. Tariffs may reduce some specialized components’ demand on U.S.
Conclusion:
This tariff war over auto components is no longer just a small trade dispute between India and the U.S. now. This has become a test of the bigger economic relationship between the two countries and their future trades.
This dispute will be badly impact on export of auto components’ Indian companies especially those who exports in the U.S. market. As a result, it could have a negative impact on their sales, margins and global position.