Trump Tariffs: Samvardhana Motherson, Sona BLW shares fall up to 8% on Mexico concerns

India's auto ancillary stocks like Sona BLW Ltd. and Samvardhana Motherson Ltd. have declined up to 8% on Monday in light of US President Donald Trump imposing a 25% tariff on goods from Canada and Mexico on Saturday, February 1.

These tariffs will take effect from 12:01 AM US time on Tuesday. The US has also imposed a 10% tariff on China.

Brokerage firm Elara Securities wrote in a note that auto component exports from India to Mexico form 3% of the total exports of $21.2 billion, amounting to $656 million. "Our industry interactions suggest these could be mainly metallurgical components like forgings and casting products," the brokerage said.

Out of the US sold vehicles, the ones produced in Mexico contribute the highest for companies like General Motors, Toyota and Volkswagen. Nearly 30-40% of vehicles sold by the first two and nearly 60% sold by Volkswagen in the US are produced in Mexico and Canada.

For Samvardhana Motherson, Elara wrote that Mexico contributes to nearly 4% of the company's overall revenue. "This will have volatility as it needs to be seen how the OEMs shift their production base to avoid the rise in vehicle prices in the US, owing to the tariffs," the brokerage added.

Mexico contributes to around 2% of Sona BLW's overall revenue and while bulk of the value addition of the products happens in India, Mexico is used more as an assembly base. "If the end OEM shifts their production to US, this can be transferred to directly cater to US facilities," the Elara note said.

Elara also said that while the modalities of tariffs on China need to be evaluated further, this could increase the prices of components from China into the US. "There could be a possibility of US companies looking for alternative countries for these products and India could emerge as one of the alternative," adding that China has one of the largest diecasting components capacities.

Shares of Samvardhana Motherson trading 8.1% lower on Monday at ₹131. The stock is down 40% from its peak. The stock was down 10% over the last one month.

Shares of Sona BLW are down 5% at ₹478.9. The stock is also down 38% from its peak. The stock had dropped 15% over the last one month.