US president Donald Trump has announced a major reduction in tariffs on UK car and metal exports, easing transatlantic trade tensions and offering a potential boost to British manufacturers.
Effective immediately, the tariff on UK car imports into the US has been cut from 27.5% to 10%, although the lower rate will only apply to the first 100,000 vehicles exported annually.
Last year, UK manufacturers exported 101,000 vehicles to the US, meaning the majority of UK car exports will benefit from the reduced rate.
The US has also scrapped its 25% tariff on UK steel and aluminium, in a further concession welcomed by industry. In return, the UK Government confirmed it will lift its tariff on US ethanol imports and has agreed to reciprocal market access on beef.
The agreement comes just a month after the US tariffs came into force in April, prompting concern among UK carmakers and officials. That initial decision had been described as “deeply disappointing” by the UK automotive industry.
Speaking during a visit to the Jaguar Land Rover plant in the West Midlands, Prime Minister Keir Starmer said the agreement represented a vital win for British industry.
“This deal means US tariffs will be cut from 27.5% down to 10% for 100,000 vehicles every year. That’s a huge and important reduction,” he told plant workers.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed the move as a lifeline for the sector.
“The application of these tariffs was a severe and immediate threat to UK automotive exporters so this deal will provide much needed relief, allowing both the industry, and those that work in it, to approach the future more positively,” said Hawes.
“Government has recognised the importance of the automotive industry to UK exports and the wider economy and has worked quickly and tirelessly with US counterparts to strike an agreement.
“We hope that it will lead to broader and deeper cooperation that reduces barriers to trade still further, charting a path to economic growth for both nations.”
Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA) welcomed the agreement: “This is a positive step that brings much-needed reassurance to businesses involved in transatlantic trade, including many of our dealer members and their manufacturing partners.
“Lower tariffs will help enhance the competitiveness of UK-built vehicles in the US market, support long-term investment, and streamline the flow of goods across borders. We are optimistic about the benefits this will bring to dealers, manufacturers, and consumers alike.
“The agreement comes at a pivotal moment for the industry, which continues to face pressures from inflation, evolving regulations, and the shift to zero-emission vehicles. Greater certainty and a stable trade environment will be essential in helping the sector plan for the future.”
The deal comes as the Bank of England cut interest rates to 4.25%.