6:50 am, May 9, 2025
The automotive industry has welcomed the UK’s ‘historic’ trade deal with the US, which has seen controversial tariffs slashed on cars exported to the UK.
The landmark agreement was confirmed in a call between the prime minister and the US president which was broadcast live on both sides of the Atlantic yesterday afternoon (May 8).
As part of the deal, US import taxes which had threatened to cripple British high-end carmakers were cut from 27.5% to 10%, while the 25% tariff on steel has also been removed entirely.
Sir Keir Starmer said the agreement will save thousands of jobs in the car and steel industries while Donald Trump hailed it ‘a great deal for both countries’.
Under the agreement, the 27.5% import charge on cars will be cut to 10% for the first 100,000 vehicles exported to the US from UK factories.
Among the UK car manufacturers to welcome the deal has been JLR, which has only recently resumed exporting vehicles to the States, following a temporary pause in response to Trump’s ‘Liberation Day’ tariffs.
Adrian Mardell, chief executive of JLR, said: ‘The car industry is vital to the UK’s economic prosperity, sustaining 250,000 jobs.
‘We warmly welcome this deal which secures greater certainty for our sector and the communities it supports.’
The news has also been well received by the SMMT, which said the announcement ‘will provide much needed relief’.
Mike Hawes, CEO of the trade body, said: ‘The agreement announced today to reduce tariffs on UK car exports into the US is great news for the industry and consumers.
‘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.
‘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.’
Despite some tariffs remaining, the deal is largely being seen as a win for the UK’s auto industry, with the bank of England estimating that nearly £10bn worth of exports from the car industry could have be impacted by US tariff plans.
Ian Plummer, commercial director of Auto Trader, said: ‘Both consumers and UK car manufacturers will be breathing a sigh of relief at a deal that staves off the worst impact of damaging tariffs on one of our biggest industries, in its biggest single global market.
‘We’ve stepped back from the brink here and we welcome the clarity and certainty this brings.’
Philipp Sayler von Amende, chief commercial officer at Carwow, added: ‘News that the UK and US have signed a deal to lower automotive tariffs to 10% is a significant relief for the British automotive sector.
‘The US tariff on UK car exports had risen to 27.5% — a level that was always going to be unsustainable, especially for premium British brands that depend heavily on the US market.
‘While the new 10% levy offers vital breathing room, the deal remains limited to a quota of 100,000 vehicles, though with potential for future expansion.
‘Attention now shifts to Europe, where French, German, and Italian manufacturers remain fully exposed to the 25% levy. Brussels will be under increasing pressure to secure a similar deal to keep EU exports competitive in the US.’
— Donald J. Trump (@realDonaldTrump) May 8, 2025
‘British workers, families, and firms will feel the benefit’
The prime minister, who spoke to the president during a hastily-arranged visit to JLR’s car plant in Solihull, said that the deal would ‘protect thousands of British jobs in key sectors including car manufacturing’.
He said: ‘This historic deal delivers for British business and British workers protecting thousands of British jobs in key sectors including car manufacturing and steel.
‘My government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world.”
Writing in the Mirror on Thursday evening, Sir Keir said it was ‘important’ to him to go back to JLR – which he visited in the days after tariffs were imposed – to ‘look those workers in the eye and tell them I had delivered on the promise I made to them in April’.
‘British workers, businesses and families are my only priority,’ he said. ‘I will always act in their interests.’
Today I’ve secured a deal with the US that boosts British businesses and saves thousands of British jobs.
I promised to protect British car makers and save our steel. This deal delivers on that promise.
And British workers, families, and firms will feel the benefit. pic.twitter.com/FT79klCMdi
— Keir Starmer (@Keir_Starmer) May 8, 2025
In an indication of why the government felt it had to act rapidly to achieve benefits for the car and steel industries, Business Secretary Jonathan Reynolds indicated jobs were at imminent risk.
Reynolds said the US was an important market to firms such as JLR, Aston Martin and Bentley and that a 25% tariff was a ‘very difficult business proposition’ in a competitive industry.
The US president had previously described the deal as ‘full and comprehensive’, but Thursday’s announcement focused on a narrower set of industries.
Away from cars, it was also announced that British-made Rolls-Royce engines would be excluded from tariffs, with a UK airline agreeing to buy ‘$10bn worth of Boeing planes’.
There were also concessions around pharmaceuticals, agriculture and aluminium.
