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Mon 30 Jun 2025
With the US-UK trade deal taking effect today, British car makers are getting ready to send a series of major shipments across the Atlantic to meet pent-up demand.
US President Donald Trump imposed a range of tariffs on foreign-made goods in April in an attempt to rebalance what he perceived as trade deficits. The US initially raised tariffs on UK-made cars to 25% for all passenger vehicles and light trucks; this was on top of a flat 10% tariff on most other UK goods.
But following negotiations with the UK government, the tariffs will now be dropped to a less stringent 10% on the first 100,000 cars exported to the US. The US was the UK’s largest export market for cars in 2024 – making up 27.4% of total exports. With around 102,000 vehicles exported last year, the vast majority should be sold within the tariff limits if similar quantities are sent over this year.
The tariffs proved calamitous for British car makers, with exports to the US immediately dropping by about half. Aston Martin stopped shipping its vehicles to the US entirely after the introduction of the tariffs, although chief executive Adrian Hallmark recently said his firm now expects to invoice around three months’ worth of vehicle sales over the next 24 hours.
The UK’s aerospace sector will also benefit from the deal, with 10% tariffs on goods like engines and aircraft parts removed and a commitment from the US to maintain them at 0%.
The Department for Business and Trade said the UK is the only country to have secured this deal with the US, which will help to protect hundreds of thousands of manufacturing jobs.
Business secretary Jonathan Reynolds said: “We agreed this deal with the US to protect jobs and support growth in some of our most vital sectors – and today, we’re delivering on that promise for the UK’s world-class automotive and aerospace industries.
“British car manufacturers can now export to the US at a significantly reduced 10% tariff rate – down from 27.5% – and aerospace goods will see 10% tariffs removed, saving sectors hundreds of millions each year and safeguarding thousands of jobs.”
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders said it was a “huge relief” for domestic car makers.
“It immediately slashes the punitive tariffs that brought the US export market to a standstill and threatened the viability of some of the most famous names in British manufacturing,” he said.
The government is also trying to negotiate a 0% tariff on British-made steel – a rate that will rise to 50% for all steel imports to the US in July. While the US has agreed to the removal of tariffs on UK steel in principle, the details have yet to be finalised.
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