US Doubles Tariffs on Indian Tyre Imports to 50%

The US administration doubled tariffs on Indian tyre imports to 50% on most categories and 25% on specified categories on August 27, 2025, potentially disrupting India's Rs 25,000 crore tyre export industry that supplies over 170 countries, with the US accounting for 18% of total exports.

The tariff increase comes as Indian manufacturers were gaining ground in the US replacement market for trucks, buses, and off-highway tyres. CareEdge Ratings warns that the steep duty hike creates a competitive disadvantage for India compared to Asian countries like Japan, Vietnam, and Indonesia, which face lower tariff barriers.

India's tyre exports have more than doubled from Rs 10,400 crore in FY18 to Rs 25,000 crore in FY25, with the sector accounting for about a quarter of the industry's revenue. US exports specifically grew from Rs 1,400 crore in FY18 to Rs 4,300 crore in FY25, with the US share rising from 13% to 18% during this period.

The tariff impact will be most severe for manufacturers with high exposure to truck, bus, and off-road tyre categories in the US market. These segments have driven India's export growth to the US, with truck and bus tyres increasing their share from 9% in FY18 to 23% in FY25. Agricultural and off-road tyres traditionally comprised 75% of US-bound shipments until FY21.

Companies with diversified export portfolios or stronger domestic market presence are expected to weather the impact better than those heavily dependent on US markets.

"The Indian tyre industry, already challenged by elevated input costs and raw material shortages, now faces added strain from steep U.S. tariffs. Despite investments of over Rs 20,000 crore in the past 4-5 years to expand capacity for catering to domestic demand and boost exports, growth momentum risks being derailed. Timely policy interventions such as strengthening export incentives, enabling enhanced R&D support, and advancing manufacturing capabilities are critical to safeguard India's global market position and ensure long-term competitiveness," said Sahil Goyal, Assistant Director CareEdge Ratings.

"With the latest tariff hikes, tyre makers with a higher exposure to truck, bus, and off-road categories in the US are likely to feel the sharpest impact. These segments have been key drivers of India's export growth to the US, and any slowdown here could materially affect overall volumes and profitability for the respective players," said Ravleen Sethi, Director CareEdge Ratings.

"However, with US tariffs on Indian tyres now at 50% for most categories, while competing nations such as Thailand, Vietnam, and Indonesia continue to face far lower duties, the industry stands at a critical crossroads. Sustaining export momentum will hinge on timely policy support, cost competitiveness, and deeper penetration into non-US markets," she added.

The rating agency believes manufacturers will need to balance market diversification with cost optimization to remain competitive. Long-term industry resilience will depend on reducing raw material dependence and accelerating expansion into non-US markets.

After the US, Germany accounts for 6% of India's tyre exports, followed by Brazil (5%), UAE (4%), and France (4%). The remaining 49% is distributed across various other markets.