Samvardhana Motherson, Sona BLW: Stocks jump over 8% as the US pauses tariffs on Canada, Mexico; check why

The pause, scheduled for 30 days, came after multiple calls between Trump and Canada's President Justin Trudeau and Mexico's Claudia Sheinbaum.

Shares of Sona BLW Precision rallied as much as 7.63% to ₹522.75 apiece on the BSE, while Samvardhana Motherson International jumped as much as 8.33% to ₹141.55 apiece.

Shares of these two companies crashed on Monday, February 3, on the announcement of tariffs.

The shares fell sharply on Monday as both Samvardhana Motherson and Sona BLW export auto parts to Canada and Mexico.

According to news reports, India exports auto components worth $21.2 billion globally, of which exports to Mexico contribute approximately 3%, amounting to $656 million. The reports add that the primary components exported to Mexico are metallurgical products such as forgings and casting materials.

Shares took a beating as the tariffs were expected to increase volatility as automakers (General Motors, Toyota, and others) reassess their supply chains. The biggest concern is whether OEMs (original equipment manufacturers) will shift production to avoid the tariff-driven cost surge, which could negatively impact Motherson’s operations in Mexico.

"If OEMs decide to relocate production to the US, Sona BLW could restructure its supply chain to directly serve US-based manufacturing facilities," the reports add.

"There are approximately 5.3 million light vehicles built in Canada and Mexico, with about 70% of these destined for the US. Further, many US-built vehicles use Canadian or Mexican-sourced propulsion systems and component sets; those components would see a tariff as well, increasing costs for vehicles produced in the US. Virtually no OEM or supplier operating under the USMCA is immune," the article added.

USMCA stands for USMCA stands for United States-Mexico-Canada Agreement. It's a free-trade agreement between the United States, Mexico, and Canada.

In 2024, the US imported some 3.6 million light vehicles from Canada and Mexico, representing 22% of all vehicles sold in the US. Mexico is currently the largest source of US light-vehicle imports, passing Japan, South Korea, and all of Europe.

The report explains that a 25% duty on the average $25,000 landed cost of a vehicle from Mexico and Canada would add $6,250. Importers are likely to pass most, if not all, of this increase to consumers. With average vehicle prices near all-time highs, this additional tariff would put further strain on affordability.

"If components and parts are also subject to the 25% tariff, vehicles produced in the US with any components sourced from Canada or Mexico would also see costs rise by 25%. Given the free flow of components across borders, the tariff would impact most vehicles produced in the US as well," it adds.

Auto parts suppliers' impact can be significant, and this will increase vehicle prices to consumers in indirect, nontransparent ways.

"We could see automakers pull back production on tariffed vehicles; similar to the reaction to the semiconductor shortage and other COVID-related supply chain shortages, some automakers could slow production until sales are lost due to lack of product. Reducing production affects supplier sales and contracts," the report added further.

Samvardhana Motherson, Sona BLW share price trend

Shares of Samvardhana Motherson have rallied 19% in the past 12 months, while those of Sona BLW have fallen nearly 19%.