Indian markets closed higher despite a sharp decline in auto stocks following U.S. President Donald Trump’s announcement of a 25% tariff on auto imports. While Tata Motors and its key suppliers faced significant losses, broader indices managed to stay in positive territory.
Investor optimism grew on speculation that the Reserve Bank of India (RBI) may relax foreign investment rules, encouraging Foreign Portfolio Investors (FPIs) to return after prolonged outflows.
Asian automakers lost over $12 billion in market capitalization on March 27 as the U.S. auto tariffs, set to take effect on April 2, sparked concerns. Toyota Motor Corp. faced the biggest hit, losing $6.8 billion in value. In India, Tata Motors saw a $1.7 billion reduction in market cap, falling to $28.7 billion.
Analysts at CLSA warned of margin pressures on Jaguar Land Rover (JLR), with 31% of its retail sales coming from the U.S. and most models produced in the UK.
Auto component companies also faced losses. Sona BLW Precision Forgings and Bharat Forge, which derive 43% and 38% of their revenue from the U.S., saw their shares drop. Samvardhana Motherson, which operates a major plant in Alabama, recovered after an 8% intraday fall, closing 3.3% lower.
Japan’s Nikkei fell 2%, while South Korea’s benchmark index declined 1.3%. In contrast, Hong Kong’s Hang Seng index rose 0.6%, shrugging off tariff concerns.
To mitigate tariff impacts, automakers like Volvo Cars, Mercedes-Benz, Hyundai, and Volkswagen’s Audi are shifting production. Meanwhile, Ferrari plans to raise prices by 10% on select models.
Trump hinted at reducing tariffs on China if ByteDance sells TikTok, offering hope for easing tensions. However, with reciprocal U.S. tariffs looming on April 2, global markets remain uncertain about future trade policies.
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