Trump's Tariff Era Begins: Investors Remain Calm on Auto Component Maker Exposed to Mexico as 25 per cent Tariff Takes Effect

The stock has already declined 13 per cent over the past month since the initial announcement of the proposed tariffs, suggesting the market may have priced in the impact

The second term of Donald Trump is more action-driven regarding tariffs. Unlike his previous tenure, which saw more rhetoric than implementation, Trump 2.0 has swiftly moved to impose tariffs. Effective Tuesday, March 4, the United States has implemented a 25 per cent tariff on imports from Mexico and Canada, which could have significant ramifications for global supply chains, particularly in the auto sector.

However, investors are taking a measured approach to this development. Shares of Samvardhana Motherson International Ltd, one of India’s leading auto component manufacturers, which derives 4 per cent of its revenue from Mexico, opened slightly lower at Rs 117.95, down from the previous close of Rs 119.40. The stock later recovered, hitting an intraday high of Rs 120.25, but by 11:50 AM, it was trading muted at Rs 119.20. Notably, the stock has already declined 13 per cent over the past month since the initial announcement of the proposed tariffs, indicating that the market may have priced in the impact.

During its February 2025 investor conference call, the company addressed concerns about potential tariff effects. The management stated:

“We have had many inquiries about trade tariffs and rollbacks, and we would like to provide you with an update. While different countries are working through trade agreements, the implications for the global auto industry are yet to be fully understood. Our company follows a globally local strategy with manufacturing plants in close proximity to our customers. All material flows, such as commodities, are typically passed through, as they are customer-nominated parts. Any changes in tariff on these parts would have a pass-through effect. For other procurement areas, we actively work to localize, thereby limiting the impact on our operations. Furthermore, as tariffs are an industry-wide concern, these would ultimately be repriced by customers.”

This auto component manufacturer primarily supplies parts to automotive original equipment manufacturers (OEMs) and has a market capitalization exceeding Rs 84,200 crore. The stock has corrected by more than 23 per cent on a year-to-date basis in 2025. 

Disclaimer: This article is for informational purposes only and should not be construed as investment advice.