JLR faces £1.6bn tariff blow in its US export market

Jaguar Land Rover (JLR) is preparing for a potential £1.2 billion hit in the wake of newly imposed US tariffs.

The impact of these tariffs, introduced under US President Donald Trump’s administration, was confirmed by Tata Group chairman N Chandrasekaran during the company’s 80th annual meeting on June 20.

Without intervention, JLR's tariff rate for exports to the US would have jumped from 2-2.5% to a punishing 27.5%.

However, thanks to a recent UK-US trade agreement signed in May, tariffs will now be capped at 10% - translating into an estimated £1.2 billion cost impact.

Even so, JLR, which derives over a quarter of its global sales from the US, said it is implementing mitigation measures to reduce the net impact to around £600 million.

It has forecast lower earnings for FY26, with operating margins expected to fall from 10% to between 5% and 7%. Shares in JLR owner Tata Motors dropped 5.2% in early trading following the news, reported The Financial Express.

The company initially suspended shipments to the US following the introduction of the 25% blanket tariff on all foreign-made vehicles and said it was rerouting available stock to more accessible markets while it evaluates pricing strategies to absorb the increased costs.

Despite the pressure, JLR’s recent performance has been robust. Revenues reached £28.9 billion, with an EBIT margin of 8.5% and a pre-tax profit of £2.5 billion.

Chandrasekaran credited the ongoing success of the Range Rover and Defender franchises, as well as the local CKD (Completely Knocked Down) assembly of select models in India, for supporting growth.

The UK-built Range Rover line remains a cornerstone of the JLR brand, although the Defender, produced in Slovakia, is more vulnerable to US trade policy.

Slovakia, as part of the EU, will not benefit from the UK-specific trade deal, making those vehicles potentially subject to the full 25% tariff.

JLR said it is in ongoing talks with both the US and UK governments to navigate trade policy in a bid to minimise disruption.