Washington, April 3, 2025: US President Donald Trump has imposed a 25 percent reciprocal tariff on cars imported from many countries including India, which became effective from today. Under this decision, heavy import duty will be imposed on vehicles manufactured outside the US. But a bigger threat than tariff is Trump’s new ‘idea’, which can create problems for the global automobile industry, especially countries like India.

At the ‘Make America Wealthy Again’ event organized at the ‘Rose Garden’, Trump not only announced a 25 percent tax on automobiles and auto parts, but also presented a proposal that can completely change the American car market. He said, “If you buy a car made in America, you will get tax exemption and will also have to pay less interest on car loan.” Trump described this ‘unique idea’ as the key to reviving American manufacturing. Boost to American cars, crisis for foreign companies

This move by Trump is clearly in the direction of strengthening the American automobile industry. He believes that tax and loan exemptions will make people prefer locally made cars, which will increase production in American factories and create new employment opportunities. Trump stressed in his address, “Our factories will be buzzing again. This is the way to make America rich again.”

However, this policy is a warning bell for countries like India. Experts say that 25 percent tariff will already affect Indian car exports, but this new proposal of tax and loan exemption can prove to be an even bigger blow to the ‘Make in India’ initiative. Automobile analyst Ravi Sharma explains, “Companies will be forced to shift production there to increase sales in America. Exports from India will no longer be as attractive.”

What will be the impact on Indian car companies?

Companies like Maruti Suzuki, Hyundai, Honda and Volkswagen export a good amount of vehicles from India to America. Trump’s policy may force these companies to consider shifting a part of their production to the US. A senior industry official, on condition of anonymity, said, “If we have to maintain competition in the US market, it may be necessary to set up a plant there. This will be detrimental to both investment and employment in India.”

The biggest question is being raised about Tesla’s proposed plant in India. Tesla had been working on a plan to set up a factory in India for a long time, but Trump’s policy may derail it. If Tesla cars made in India will have to pay 25 percent import duty in the US, while production in the US will get tax and interest exemption, then the justification for the company to invest in India becomes less. Auto sector expert Anil Mehta says, “Production in the US is now a more logical option for Tesla. Its plant in India may now remain a dream.”

Long-term impact on global trade

Trump’s move is not limited to India alone. It will also affect cars coming from Canada, Mexico and European countries. International trade expert Dr. Priya Gupta says, “This policy promotes protectionism. In the long run, this will affect the global supply chain and car prices may also increase.” For now, Trump’s ‘idea’ claims to strengthen the US economy, but on the other hand, the challenges for countries like India are clear. As this policy is implemented, major changes can be seen in the automobile industry. Will Indian companies be able to overcome this double pressure? This question is still unanswered.