What's Happening in Tata Motors Shares? Know How US-EU Trade Deal Will Impact JLR

On July 28, 2025, Tata Motors shares surged by 2%, reaching an intraday high of ₹700.6 on the National Stock Exchange (NSE), buoyed by a breakthrough US-EU trade deal announced the previous day. This agreement, which averted a potential trade war by reducing tariffs on EU goods, including automobiles, from a threatened 30% to 15%, has significant implications for Tata Motors’ luxury subsidiary, Jaguar Land Rover (JLR). As JLR accounts for approximately 70% of Tata Motors’ revenue and 77% of its profits, the deal’s impact on JLR’s operations is a critical driver of the parent company’s stock performance. This blog explores the recent movement in Tata Motors shares, the specifics of the US-EU trade deal, and how it affects JLR’s outlook.

Tata Motors Shares: A Rollercoaster Ride

Tata Motors’ share price has been under pressure in 2025, declining 8% year-to-date and a staggering 39% over the past year, with its market capitalization standing at ₹2.53 lakh crore as of July 28. The stock faced significant headwinds earlier this year, particularly after US President Donald Trump imposed a 25% tariff on all foreign-made vehicles, effective April 2, 2025, prompting JLR to pause US-bound shipments in April. This led to a 10% drop in Tata Motors’ shares on April 7, marking its worst day in over three years. The US, JLR’s second-largest market after the EU, accounted for 23% of its global sales in FY24, making the tariff a major concern for investors.

The recent US-EU trade deal has provided some relief, driving Monday’s 2% rally. However, the stock remains volatile, with analysts noting that JLR’s exposure to global trade dynamics and its lack of US-based manufacturing continue to pose risks. Despite the uptick, Tata Motors’ shares are still 5.5% lower over the past six months, reflecting ongoing concerns about tariffs, EV transition costs, and softer demand in key markets like Europe and China.

The US-EU Trade Deal: A Game-Changer for JLR?

On July 27, 2025, US President Donald Trump and European Commission President Ursula von der Leyen finalized a last-minute trade agreement, averting a 30% blanket tariff on EU exports set to take effect on August 1. Instead, a 15% tariff will now apply to most EU goods, including automobiles, down from the previous 27.5% levy. The deal also includes commitments from the EU to purchase $750 billion in US energy and invest $600 billion in the American economy, signaling a broader economic partnership.

For JLR, this agreement is significant but comes with nuances. While JLR is headquartered in the UK, which is no longer part of the EU, it operates a major manufacturing facility in Slovakia, an EU member state. This plant produces the best-selling Defender SUV, which does not benefit from the UK-US trade deal signed in May 2025 that reduced tariffs on UK-made vehicles to 10% for a quota of 100,000 cars annually. The US-EU deal’s 15% tariff on EU-made vehicles, including those from JLR’s Slovakia plant, is a marked improvement over the 30% threat but still higher than the UK-specific concession. As a result, JLR’s Range Rover models, produced in the UK, will face lower tariffs (10%) compared to the Defender, which will incur the 15% EU tariff.

The US market, which contributed over a fifth of JLR’s revenue in FY24, is critical for the company’s growth. In 2024, JLR’s global wholesale deliveries rose 22%, with the US being a key growth driver. The tariff reduction provides predictability, allowing JLR to resume exports from its Slovakia plant, which were paused earlier this year due to tariff uncertainties. However, analysts estimate that the 15% tariff could still lead to a 5–10% hit to JLR’s earnings per share, as higher costs may need to be passed on to US consumers, potentially dampening demand among price-sensitive buyers.

JLR’s Strategic Response and Challenges

JLR has been proactive in mitigating tariff impacts. Following the April tariff announcement, the company paused US shipments, redirected units to other markets, and explored pricing adjustments to maintain profitability. JLR is also lobbying for further trade concessions and investing in cost-saving “enterprise missions” aimed at saving £1.4 billion annually to offset tariffs and other pressures, such as foreign exchange fluctuations and weaker demand in China.

However, challenges persist. JLR’s lack of US-based manufacturing makes it more vulnerable to tariffs compared to competitors like Mercedes-Benz and BMW, which have established US plants. Additionally, JLR’s ambitious “Reimagine” strategy, which aims to transition to fully electric models by the 2030s, requires significant R&D and capital expenditure, potentially squeezing margins in the near term. In June 2025, JLR revised its FY26 EBIT margin forecast to 5–7%, down from 10%, citing tariffs and EV investment costs. This cautious outlook contributed to a 5% drop in Tata Motors’ shares on June 16, 2025, and continues to weigh on investor sentiment.

Analyst Perspectives and Market Sentiment

Analyst views on Tata Motors remain mixed but lean positive. Nomura maintains a “Buy” rating with a target price of ₹861, citing JLR’s luxury expansion strategy and improving margins in Tata Motors’ domestic commercial vehicle business. Macquarie echoes this with an “Outperform” call, noting JLR’s progress toward a net cash balance sheet by FY25. However, CLSA downgraded Tata Motors to “Outperform” from “High Conviction Outperform” in April, projecting a 14% drop in JLR’s volumes for FY26, including a 26% decline in the US due to tariffs.

Posts on X reflect cautious optimism. One user, @NiranjanGhatule, noted, “Auto Tariff Slashed to 15% From 25%. Actually This is Good News For #TataMotors But Don’t know How market Will React,” highlighting the market’s uncertainty despite the positive development. Another post from @ETNOWlive emphasized the deal’s role in easing concerns over rising tariffs, aligning with the stock’s 2% rally on July 28.

Looking Ahead

The US-EU trade deal provides JLR with much-needed clarity, but its benefits are tempered by the 15% tariff on EU-made vehicles and JLR’s reliance on non-US manufacturing. Tata Motors’ shares are likely to remain volatile as investors weigh the tariff’s impact against JLR’s long-term growth potential, particularly in the EV