Cutting trade taxes slashes profits at Jaguar Land Rover
In the world of automotive manufacturing, Jaguar Land Rover (JLR) has been grappling with significant challenges. One of the main factors behind this struggle is the US trade tariffs, which have had a direct and material impact on JLR's profitability.
The tariffs, initially imposed at 27.5%, caused a significant negative impact on JLR's profits and revenue. This led to a temporary suspension of shipments to the US in April, disrupting supply chains and dealer inventories. As a result, JLR's revenue dropped by 9.2% to £6.6 billion, and profit after tax plummeted by 51% to £248 million in Q1 2025/26.
The US accounts for approximately 25% of JLR's sales, making these tariffs a substantial financial hit. It's important to note that JLR has no manufacturing facilities in the US, relying mostly on UK production, with some in Slovakia. The tariffs exacerbated challenges already faced due to Jaguar's transition to an all-electric lineup and unfavourable currency movements.
However, a trade deal between the UK and the US, effective from June 30, 2025, has brought some relief. The tariff rate on UK-made vehicles dropped from 27.5% to 10% for the first 100,000 cars imported to the US. Similarly, an EU-US trade deal announced in July 2025 reduced tariffs on EU-produced vehicles from 27.5% to 15%. This reduction is expected to ease financial pressure and supply chain disruptions on JLR in future quarters.
While the initial revenue loss and operational challenges cannot be fully recovered immediately, this reduction in tariffs promises a potential improvement in JLR’s profitability and supply chain stability going forward.
Meanwhile, for those looking to invest in the ever-evolving world of finance, there are several DIY investing platforms available. Hargreaves Lansdown, Interactive investor, InvestEngine, AJ Bell, and Trading 212 are just a few examples. Each platform offers opportunities for DIY investing, and you can find more information about them by clicking on the "Learn More" option.
It's worth noting that while affiliate links may be present on these platforms, which could result in commissions for This is Money, the editorial independence of the platform recommendations remains un compromised.
In other news, Jaguar Land Rover announced a new chief executive, PB Balaji, who will take over from November. The slump in JLR sales was also due to US trade tariffs on car parts. The previous CEO, Adrian Mardell, resigned following a highly criticised 'woke' rebrand.
As the situation continues to evolve, it will be interesting to see how JLR navigates these challenges and how the DIY investing platforms fare in the rapidly changing financial landscape. Stay tuned for more updates.
- In the face of the significant challenges faced by Jaguar Land Rover (JLR), potential investors might consider exploring DIY investing platforms such as Hargreaves Lansdown, Interactive Investor, InvestEngine, AJ Bell, and Trading 212 for opportunities in the ever-evolving world of finance.
- The reduction in tariffs on UK-made vehicles from 27.5% to 10% under the trade deal between the UK and US, effective from June 30, 2025, could potentially improve Jaguar Land Rover’s (JLR) profitability and supply chain stability in future quarters.
- The US trade tariffs on car parts also contributed to the slump in JLR's sales, apart from the challenges due to Jaguar's transition to an all-electric lineup and unfavourable currency movements.
