(Reuters) -British luxury carmaker Jaguar Land Rover lowered its fiscal 2026 earnings before interest and taxes margins forecast to 5%-7% on Monday from 10% earlier, amid uncertainty in the global auto industry as U.S. tariffs loom.

Shares in the company's Indian parent Tata Motors slumped as much as 5.2% in early trade following the announcement.

The revised EBIT margin forecast is also below JLR's reported 8.5% margin for the previous fiscal year ended March 31.

JLR added it sees free cash flow of close to zero in fiscal 2026.

The company, which derives over quarter of its sales from the U.S., had temporarily paused shipments to the country after President Donald Trump slapped a 25% duty on all foreign-made vehicles sold in the world's second-largest car market.

The 'Defender' sport utility vehicle maker said it is re-allocating available units to "accessible markets", to boost profits.

It added that it continues to engage with both the U.S. and UK governments regarding a trade deal signed in May, which allows the UK to export 100,000 cars a year to the U.S. at a 10% tariff, below the 25% levy for other nations.

While JLR's "Range Rover" SUV lineup is manufactured in the UK, the popular "Defender" is made in Slovakia, a member of the European Union, which does not yet have a trade pact with the Trump administration.

The carmaker said it is assessing pricing actions in the U.S. to help offset the tariff impact.

Analysts have said JLR may be less affected by the increased costs associated with the tariffs, thanks to a wealthier customer base that is unlikely to be deterred by a bigger price tag.

However, Tata Motors remains among the most exposed Indian automakers to the U.S. duties, as JLR lacks local manufacturing in the country, unlike most of its rivals, including German brands Mercedes-Benz and BMW.

(Reporting by Kashish Tandon and Nandan Mandayam in Bengaluru; Editing by Nivedita Bhattacharjee and Rashmi Aich)