Tariffs can disrupt supply chains, drive up car prices: Mercedes Benz India CEO

Iyer noted that rising costs will impact not just US consumers but could also affect car prices in India. “This puts inflation up. This puts pricing up, not only for consumers in the US, but also with supply chains getting distorted, there may be an adverse impact on the pricing, even for cars in India,” he said.

While the tariffs could encourage more US manufacturing, Iyer cautioned that supply chains cannot be shifted overnight. Mercedes-Benz already has a factory in Tuscaloosa, producing 300,000 cars annually, but the company will need to reassess its production and exports. “We made 300,000 cars there. So technically, we have a major footprint in the US… we need to take a look at it to see how to balance this,” Iyer said.

Iyer said India’s auto sector is strong enough to compete in a free trade environment. He believes that lowering tariffs can help the industry grow and increase exports. “The Indian automotive industry is now mature enough, and it’s time that these tariffs are much more open.”

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Bilateral trade agreements between India, the US, and the EU could further open global opportunities for Indian manufacturers.

In the short term, tariffs will drive inflation, making vehicles more expensive. However, if the situation persists, automakers will be forced to optimise their supply chains and focus on key markets. While immediate disruptions are expected, businesses will wait to see how trade policies evolve before making major changes.

Also Read: ‘Disastrous policy’: Global economists question US tariff math, flag political risk for Republicans

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