Tata Motors shares rose 3% for the second consecutive day and opened at Rs 700 in Thursday’s trade. The rally comes amid rising optimism over a potential trade agreement between the United States and the United Kingdom, which could significantly benefit Tata Motors’ British luxury subsidiaries, Jaguar and Land Rover (JLR).

According to The New York Times, the US and UK are likely to sign a trade deal that would implement “zero-for-zero” tariffs on all goods. If this agreement is finalized, it would be a major positive development for Tata Motors. This is because nearly 78% of Tata Motors’ total revenue comes from Jaguar and Land Rover, making their performance critical to the company’s financial health.

The United States is one of the most important markets for JLR, contributing about 22% of its total revenue. However, the situation turned challenging recently when US President Donald Trump announced a 25% tariff on vehicles manufactured outside the United States. This led Tata Motors to temporarily halt shipments of Jaguar and Land Rover vehicles from the UK to the US — a move that triggered a sharp 14% fall in Tata Motors’ stock in just one day.

Although shipments to the US have now resumed, investors are closely watching the developments around the proposed US-UK trade deal. If the deal goes through and results in the removal of the newly imposed tariffs, it would improve the pricing power and margins of JLR vehicles sold in the US.

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