Trump's Tariff Announcement Sends Tata Motors Shares Plunging

Following the announcement by US President Donald Trump regarding the implementation of a 25% tariff on imported cars and light trucks, Tata Motors shares saw a significant decline. The stock dropped by 6.31% to Rs 663 during early trading hours on Thursday.

The United States is a crucial market for Jaguar Land Rover (JLR), accounting for 22% of its total sales, as per JLR's annual report for the 2024 financial year. By 10:54 AM, Tata Motors shares were trading at Rs 675.65, down Rs 32 or 4.56% on the Bombay Stock Exchange.

Long-term Performance and Future Outlook

Despite the recent downturn, investors who held Tata Motors' stock for three years enjoyed a substantial return of 63.91%. However, the stock has underperformed its sector by 33.35% over the past year.

Company executives have reassured investors about JLR's FY25 EBIT targets, with the Chief Financial Officer affirming the company's path towards achieving an EBIT margin target of at least 8.5%. Yet, the discontinuation of Jaguar models may impact JLR's volume performance in FY26.

Global Implications and Industry Response

The imposition of tariffs is expected to escalate international trade tensions, with potential repercussions for global supply chains and automotive prices. Trump's strategy includes using tariffs as a revenue source to fund tax reductions and bolster the US industrial sector, with the new tariffs set to commence on April 3.