WHEEL OF MISFORTUNE

With nearly half the sector coming under the punishing tariffs, the auto components ecosystem must innovate and diversify, or risk being left behind

- By M.G. ARUN

The Fallout: India's auto component exports will be only partially exposed to the blow of Trumpian tariffs. Of its $6.6 billion (Rs 58,100 crore) worth of auto parts exports to the US in calendar year 2024, as much as $3.58 billion (Rs 31,504 crore), or 55 per cent, will face 25 per cent tariffs. These include parts and components for cars and small trucks, covered under US Proclamation 10908. The remaining 45 per cent—a little over $3 billion (Rs 26,400 crore)—will attract the steep 50 per cent levy.

The Competitors: Global exporters are recalibrating their supply chains, and Mexico is emerging as a key pivot point. Chinese and Japanese companies are already establishing manufacturing bases there. A significant advantage Mexico has is that labour is far cheaper there than in the US. However, countries like Vietnam, South Korea, the UK and some European Union countries are also becoming increasingly competitive due to lower US tariff barriers. While China faces restrictions on its components being used in goods made for the US, manufacturers in the UK and EU have already scaled up export capacities to take advantage of 15-20 per cent leverage the new tariff structure gives them.