The UK and US have signed an agreement to cut back tariffs on British-made cars, marking a big shift in trade relations following months of negotiations and mounting pressure from automotive manufacturers.
Announced by President Donald Trump and UK Prime Minister Sir Keir Starmer throughout the G7 summit in Canada, the deal will partially implement terms from a pact originally agreed last month.
It allows for as much as 100,000 British vehicles to be exported to the US annually under a reduced 10% tariff, down from a 25% rate Trump imposed earlier this yr on foreign-made vehicles.
Automobile exports from the UK were already subject to a 2.5% duty. The imposition of the 25% tariff had threatened to lift that to 27.5%, dealing a severe blow to UK manufacturers.
The brand new 10% rate, though still a levy, has been described as a “huge reassurance” by Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders.
“This provides British manufacturers something of a competitive edge,” Hawes told the BBC. “Lots of our key rivals, like Italy and Germany, remain subject to the total 27.5% tariff.”
The announcement is the primary trade agreement of its kind from the Trump White House since sweeping tariffs were introduced on a variety of world imports earlier this yr.
Nonetheless, the deal stops in need of removing US duties on UK steel and features a 10% tariff on most UK goods, disappointing some industry leaders.
For Jaguar Land Rover, Britain’s largest automotive manufacturer, the deal comes as a partial lifeline. The Tata-owned company was forced to pause US-bound shipments of vehicles in April as a result of the 25% duty and has since cut its annual profit guidance. It now expects margins between 5% and seven%, down from 8.5% last yr and 10.7% in the primary quarter of 2025.
Although JLR produces its flagship Range Rover models within the UK, its popular Defender SUV is inbuilt Slovakia and stays subject to the total US tariff.
Prime Minister Starmer welcomed the agreement, calling it a “very vital day” for each countries and a step toward stabilising transatlantic trade amid turbulent economic conditions.
The tariff reduction will come into force seven days after the deal’s official publication.
This Article First Appeared At www.am-online.com
