Tata Motors Shares Climb 3% as UK and US Strike Landmark Trade Deal
| 2025-05-09
Representative image.
Tata Motors stock rose 3% following a new US-UK trade agreement benefiting the auto sector, including reduced car export tariffs and steel duty cuts.
Tata Motors Gains on Trade Pact Boosting UK Car Exports to US
Shares of Tata Motors rose by 3% on 9 May, continuing a three-day rally, after the United Kingdom and the United States announced a new bilateral trade deal aimed at easing tariffs and boosting industrial cooperation, particularly in the automotive and metals sectors.
The agreement, the first of its kind involving the US since tariffs were raised under former President Donald Trump, includes provisions to reduce import duties on a range of UK exports, such as vehicles, steel, beef, and ethanol.
The announcement was made by British Prime Minister Keir Starmer at the Jaguar Land Rover (JLR) plant in Solihull, northern England. JLR, a subsidiary of India-based Tata Motors, stands to benefit significantly from the agreement, which will allow up to 100,000 UK-made vehicles to enter the US annually at a reduced 10% tariff. Previously, UK car exports to the US were subject to tariffs as high as 27.5%.
New Quota and Reduced Tariffs for Vehicles
Under the terms outlined, a quota of 100,000 vehicles per year can now be exported from the UK to the US under a 10% tariff. Exports exceeding that limit will continue to face the higher 25% tariff, which has been in place since the US increased duties on foreign-made automobiles.
While the agreement stops short of lifting the blanket 10% tariff on all UK imports, it offers substantial relief for the automotive sector. “We are the first country to secure such a deal with the United States, and in a world facing global instability, that’s extremely significant,” Prime Minister Starmer said during his address to JLR employees.
The reduced tariff rate is particularly significant given that it closely matches the total number of UK vehicles exported to the US last year. The move is expected to make JLR models more competitive in the American market, potentially boosting demand and revenue for Tata Motors.
Steel, Beef and Ethanol Also Included
In addition to automotive provisions, the deal eliminates the 25% tariff on UK steel exports to the US. This measure could support British steelmakers by improving market access and cost competitiveness.
The agreement also introduces reciprocal benefits for the agricultural sector. UK farmers will gain access to a tariff-free quota of 13,000 metric tonnes of beef exports to the US. Furthermore, the ethanol used in brewing and beverage production will also be exempt from duties, removing trade barriers in a niche but valuable export segment.
Market Response and Broader Gains for Tata Motors
The market welcomed the news, with Tata Motors’ stock reaching Rs 701 per share by mid-morning on the Bombay Stock Exchange. The rise continues a positive trend driven by optimism over international trade developments and Tata Motors' internal restructuring.
Analysts also pointed to other factors underpinning investor confidence. These include the recently announced India-UK Free Trade Agreement, which is expected to reduce import duties on luxury vehicles in India, and strong quarterly performance from JLR.
In the March quarter of the 2024–2025 fiscal year, JLR reported a 6.7% increase in sales from the previous quarter and a 1.1% gain year-on-year, despite weaker performance in China, one of its major markets.
Corporate Restructuring Adds to Optimism
In a further boost to investor sentiment, Tata Motors has announced plans to demerge its operations. The company aims to separate its Commercial Vehicles division from its Passenger Vehicles, Electric Vehicles, and JLR businesses into two independently listed entities.
This strategic move is intended to streamline operations, increase business focus, and ultimately deliver greater value to shareholders. The proposal has drawn support from market analysts and is seen as a sign of the company’s forward-looking growth strategy.
Context:
The US-UK agreement is the first formal trade arrangement entered into by Washington since the Trump administration introduced broad tariffs on foreign imports, disrupting global trade flows. Though the new deal does not fully dismantle these measures, it provides targeted relief that could set the tone for future bilateral negotiations.
While detailed terms are still being finalised, the framework has been praised for supporting key industries on both sides of the Atlantic and for signalling renewed US engagement in global trade partnerships.
As the global automotive landscape continues to evolve, the easing of tariffs and trade barriers could play a pivotal role in shaping future market access and competitiveness for manufacturers such as Tata Motors.
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