Jaguar Land Rover Automotive (JLR) announced this week that it will stop sending vehicles to the United States. This decision is in large part a response to a recent 25% vehicle import tax that has been levied by President Donald Trump. It’s a smart play from the British carmaker. It is evaluating how these punitive tariffs will affect its business, given that it has sent large amounts to the U.S. recently.
The company, one of the largest car manufacturers in Britain, has already taken proactive measures to mitigate the impact of these tariffs. Barnes explained that JLR manufactured inventories in the U.S. prior to the tariffs being implemented. This approach has allowed them to smooth the transition and avert disruptions in supply, at least for now. The U.K. factories are responsible for manufacturing various models, including Nissan’s Qashqai and Juke, BMW Mini, and Toyota Corolla, alongside its luxury Land Rover and Jaguar vehicles.
Recent statistics show a stunning 50% increase in British exports of new vehicles to the United States. Exports were up 38.5% in December, up 12.4% in January and then up another 34.6% in February. By large margins, cars have experienced the largest percentage increases in their trade. Even these are still a tiny fraction of total trade between Britain and the U.S., which is dominated by services.
As JLR freezes its exports this month, experts said they anticipate a wave of other UK manufacturers to do the same. Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), reacted to the announcement. Yet he stepped back to underscore its more ambitious industry-wide implications. He continued, “The industry is already dealing with a number of headwinds and this announcement is just adding to the perfect storm of bad timing.”
British carmakers created nearly £8.3 billion ($10.7 billion) economic deficit for the respective nations by exporting vehicles to their counterparts across the pond to the U.S.. Those were the twelve-month shipments up to September. Manufacturers are already struggling with record-high inflation and supply chain issues. Increased tariffs will just exacerbate this crisis. They are already pressed with falling internal demand and having to retool their factories for the electric vehicle transition.
Analysts including David Bailey have warned that the future of the industry looks bleak under these terms. He remarked, “I expect similar stoppages from other producers as firms take stock of what is unfolding,” highlighting the uncertainty faced by manufacturers navigating these new trade barriers.
JLR has emphasized the importance of the U.S. market for its luxury brands. They re-iterate that any disruption to this industry would have a major impact on their business plan and bottom line.
“The USA is an important market for JLR’s luxury brands.” – Jaguar Land Rover Automotive
David Bailey further noted that this pause reflects initiatives by manufacturers such as JLR to proactively manage inventory ahead of tariff implementation. Manufacturers such as JLR wanted to get a step ahead. This kept working inventory flowing to the U.S. before the tariffs really started to have an impact.
