Tata Motors shares slide over 6% after Trump slaps 25% tariffs on auto imports to US

Shares of Tata Motors, the parent company of Jaguar Land Rover (JLR), fell 6.31% to Rs 663 in early trade on Thursday after U.S. President Donald Trump announced that a 25% tariff on imported cars and light trucks would take effect next week.

The US is a crucial market for Jaguar Land Rover. According to JLR's annual report for the 2024 financial year, 22% of its total sales came from the US market.

In a management meeting, the company's leadership reassured investors that Jaguar Land Rover (JLR) is on track to meet its FY25 EBIT guidance. The CFO confirmed that the company is on track to achieve its FY25 EBIT margin guidance of at least 8.5%, but also noted that the discontinuation of Jaguar models could impact JLR’s volume performance in FY26.

Furthermore, it was noted that potential U.S. tariffs on Europe could force JLR to counterbalance the effects through price increases and cost-saving measures. Trump is set to impose retaliatory tariffs on April 2, but the U.S. administration has suggested that not all tariffs will be enforced. However, there is no clarity on which countries or sectors might be exempt.

Donald Trump’s move further escalates the global trade war he reignited upon returning to the White House this year. Auto industry experts anticipate that the move will increase prices and disrupt production.

'We're going to impose a 25% tariff on all cars not made in the United States,' Trump stated during an event in the Oval Office.

Trump, who views tariffs as a way to generate revenue to offset his promised tax cuts and revitalize the U.S. industrial sector, confirmed that the tariffs would start on April 3—the day after he plans to announce reciprocal tariffs targeting the countries contributing most to the U.S. trade deficit.

Global auto stocks rocked

Uncertainty over Trump's trade plans and worries they could trigger a downturn have roiled financial markets, with consumer confidence also falling in recent months amid fears of the tariffs' effects. Wall Street slumped ahead of Trump's Wednesday afternoon announcement, with shares in General Motors down 3.1%, although Ford eked out a 0.1% gain.

On Thursday in Japan, the world's top-selling automaker, Toyota, was down almost 3.5%, while Nissan shed 2.5% and Honda fell as much as 3.1%. Mitsubishi Motors decreased 4.5%, while Mazda dropped 5.9% and Subaru tumbled 6.1%. In South Korea, Hyundai shares dipped 2.7%.

Tata Motors share price performance

Shares of Tata Motors fell 28.18% and underperformed its sector by 33.35% over the past year. Meanwhile, the stock offered a 63.91% return over the last three years."

(With inputs from agencies)