Trump’s Auto Tariffs Cause Tata Motors Shares to Drop

Tata Motors Shares Fall After Trump’s Tariff Announcement

On Thursday, during early trading hours, Tata Motors shares dropped by 6.31% to Rs 663. This decline happened after US President Donald Trump declared a 25% tariff on imported cars and light trucks, effective from next week.

USA: A Key Market for Jaguar Land Rover

• The United States accounts for 22% of total sales for Jaguar Land Rover (JLR), as per their annual report for the 2024 financial year.

Tata Motors Stock Performance Overview

• At 10:54 AM, Tata Motors shares were trading at Rs 675.65, down Rs 32 or 4.56% on the Bombay Stock Exchange.
• Over the past year, Tata Motors’ stock has decreased by 28.18% and underperformed its sector by 33.35%.
• However, investors who held the stock for three years have gained a return of 63.91%, according to an ET report.

JLR’s FY25 EBIT Targets

During a management conference, company executives reassured investors about JLR’s FY25 EBIT targets. The Chief Financial Officer confirmed the company’s path towards achieving the FY25 EBIT margin target of at least 8.5%, while noting that JLR’s volume performance in FY26 could be affected due to the discontinuation of Jaguar models.

Possible Consequences of US Tariffs

• According to the ET report, the company indicated that potential US tariffs on European imports might require price adjustments and efficiency measures to counteract the impact.
• Although Trump intends to implement retaliatory tariffs on April 2, the US administration has suggested selective enforcement. However, specific details about exempted countries or sectors remain uncertain.

Rising International Trade Tensions

Trump’s decision escalates international trade tensions following his return to the White House this year. Industry analysts predict this development will result in higher prices and disruptions in the automotive sector’s supply chain.

Trump’s Comments on Tariffs

“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.

Tariffs as a Revenue Generator

Trump views tariffs as a revenue source to offset his promised tax reductions and bolster the US industrial sector. He confirmed the tariffs would start on April 3, following his planned announcement of reciprocal tariffs targeting nations with the largest contributions to the US trade deficit.