Global automobile stocks declined as US President Donald Trump signed an order on Wednesday to levy a 25% tariff on all auto imports into the US, widening a global trade war ahead of broader tariff push beginning next week.

“What we’re going to be doing is a 25% tariff on all cars that are not made in the US,” Trump said on Wednesday. “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years.”

The tariffs will come into force on 2 April and the US will start collecting them a day later.

The White House said the tariffs will apply not only to fully assembled cars but key automobile parts, including engines, transmissions, powertrain parts and electrical components.

Tariffs on parts will take effect no later than 3 May, according to the order, with the list also likely to expand over time to include additional parts.

Trump’s order specified automobile tariffs would be collected starting just after midnight, at 12:01am Washington time on 3 April.

‘Auto tariff neutral for India’

In Mumbai, shares of Tata Motors Ltd slid by the most of 5.56% as its luxury subsidiary, Jaguar Land Rover (JLR), has a base in the US market.

Shares of auto ancillary firms such as Sona BLW Precision Forgings dived about 6%, while those of Bharat Forge and Samvardhana Motherson International Ltd declined by about 2.3%.

While the announcement sent ripples through global automotive markets, its implications for India’s auto industry remain limited—and may, in fact, present an opportunity for Indian exporters, according to trade think tank Global Trade Research Initiative (GTRI).

An analysis by GTRI of India’s auto and auto component exports in 2024 suggested that the impact of these tariffs on Indian exporters will be minimal.

In the case of passenger cars, for instance, India exported a modest $8.9 million worth of vehicles to the US, compared with $6.98 billion in global exports—meaning about 0.13% of India’s cars are US-bound.

“This negligible exposure implies the tariffs will have no real effect on India’s thriving car export business. Any lowering of tariffs by India to avoid tariffs on passenger cars would be counterproductive,” GTRI said.

However, pointing to Australia, GTRI said that when Canberra cut its import tariffs from 45% to 5% in the late 1980s, it paved the way for the eventual collapse of its domestic auto manufacturing industry.

“With the Indian auto sector contributing nearly one-third of the country’s manufacturing GDP, any similar misstep must be avoided. Preserving the stability of the Indian auto sector is vital,” GTRI said.

In other categories too, US exposure is either low or manageable. Truck exports to the US were at $12.5 million, or 0.89% of global truck exports.

Some impact is likely in car chassis fitted with engines, where the US accounted for $28.2 million of India’s $246.9 million in global exports (or about 11.4%). However, this remains a small segment of India’s total auto exports.

The segment that warrants the most attention, however, is auto parts.

India exported $2.2 billion worth of auto parts to the US in 2024, comprising 29.1% of its global auto part exports.

While this initially appears concerning, a closer look showed a level playing field. The US imported $89 billion worth of auto parts globally last year, with Mexico accounting for $36 billion, China for $10.1 billion, and India for just $2.2 billion. Since the 25% tariffs apply across the board, all exporting countries face the same hurdle.

In this context, India’s auto component industry may even find an opening. With its competitive advantage in labor-intensive manufacturing and competitive India’s import tariff structures (ranging from 0% to 7.5%), India could increase its market share in the US over time. Rather than retaliating, the Indian government should view the tariff move as a neutral—or even mildly advantageous—event in the long term, GTRI advised.

The war cry

Meanwhile, Trump has said that the tariffs are “permanent,” adding that he was not interested in negotiating any exceptions.

In response, governments from Ottawa to Paris have threatened retaliation, hammering global auto stocks.

The US imported $474 billion worth of automotive products last year, including passenger cars worth $220 billion, with Mexico, Japan, South Korea, Canada and Germany being the biggest suppliers.

European Commission President Ursula von der Leyen called Trump’s latest move as “bad for businesses, worse for consumers,” while new Canadian Prime Minister Mark Carney called the tariffs a “direct attack” and said retaliatory measures were being considered.

“We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together,” Carney told the media in Ottawa.

German economy minister Robert Habeck, meanwhile, called for a firm response as news of the tariffs wiped off billions of euros of investor wealth on Thursday.

“What counts now is to have a firm response to these tariffs from the EU. It needs to be clear that we will not take this lying down,” he said in a statement.

Amid slowing economic growth in Europe’s biggest economy, Germany’s car industry has said that the tariffs are a “fatal signal.”

In France, finance minister Eric Lombard called Trump’s plan “very bad news” and said the only solution was for the EU to raise its own tariffs.

China said the US tariffs violate World Trade Organization (WTO) rules, undermining the multilateral trade system and was “not conducive to solving its own problems.”

Japanese Prime Minister Shigeru Ishiba said Tokyo will put “all options on the table,” while South Korea said it would put in place an emergency response by next month.

Brazilian President Luiz Inacio Lula da Silva vowed to lodge a complaint with the WTO over a levy on Brazilian steel.

Meanwhile, Trump warned early Thursday that he might hit the EU and Canada with larger tariffs if they teamed up to retaliate.