The United States will reduce tariffs on most British-made vehicles to 10 percent as part of a newly announced bilateral trade framework, allowing the U.K. to export up to 100,000 vehicles annually at a lower rate.
The agreement, unveiled yesterday by President Donald Trump and British Prime Minister Keir Starmer, marks the first significant trade arrangement under Trump’s current term and comes amid rising tensions over global tariffs. The deal provides substantial relief to the U.K. auto sector, which had been grappling with a 25 percent U.S. tariff on imported vehicles in effect since April 3rd.
Under the terms of the framework, British vehicle exports within the 100,000-unit quota will face a 10 percent tariff—still higher than the previous 2.5 percent rate but substantially lower than the recently imposed 25 percent levy. Exports exceeding the quota will remain subject to the full 25 percent tariff.
Tariffs on a broad array of auto parts had already taken effect as of May 3rd, further impacting cross-border trade in the automotive industry. British automaker Jaguar Land Rover (JLR) had temporarily paused shipments to the U.S. after introducing the tariffs but has since resumed exports. “We warmly welcome this deal, which secures greater certainty for our sector and the communities it supports,” said JLR CEO Adrian Mardell in a statement.
According to the Society of Motor Manufacturers and Traders, the U.K. exported approximately 102,000 vehicles to the U.S. in 2024, meaning the quota will accommodate nearly the entirety of Britain’s annual car exports to the American market. The agreement also includes provisions on steel. The U.S. will eliminate tariffs on U.K. steel exports, which had faced 25 percent duties since March 12th. The move follows the U.K. government’s decision last month to take control of British Steel to safeguard operations.
Tariff reductions are part of a broader effort to stabilize international trade, which has been roiled since the Trump administration reimposed sweeping duties earlier this year. While the U.K. will benefit from reduced tariffs, it has also agreed to lower its own duties on U.S. goods to 1.8 percent from 5.1 percent. “This is a fantastic, historic day,” Starmer said during a teleconference. President Trump described the agreement as a win for American manufacturers: “It opens up a tremendous market for us.”
However, not all share that enthusiasm. The American Automotive Policy Council (AAPC), which represents the Detroit Three—Ford, General Motors, and Stellantis—criticized the agreement, warning that it could disadvantage North American-made vehicles under the U.S.-Mexico-Canada Agreement (USMCA). “Under this deal, it will now be cheaper to import a U.K. vehicle with very little U.S. content than a USMCA-compliant vehicle from Canada or Mexico that is half American parts,” said AAPC President Matt Blunt. “This hurts American automakers, suppliers, and auto workers.”
Industry analysts note that the U.K. agreement may serve as a blueprint for future negotiations with other global partners, raising concerns about competitive parity in the North American market.
The White House defended the move. Spokesperson Kush Desai said the administration was “working hand-in-glove with automakers to restore manufacturing,” citing custom tariff relief and deregulatory policies to bolster U.S. industry.
While the vehicle tariff reduction provides temporary relief to British exporters, automakers across the globe continue to face steep costs due to ongoing trade tensions. Ford recently confirmed it had increased prices on Mexican-built vehicles and expects tariffs to add $2.5 billion in costs for 2025, though it anticipates mitigating about $1 billion of that total.
General Motors projected $4 billion to $5 billion in tariff-related expenses but hopes to offset up to 30 percent of those costs. Toyota has estimated $1.2 billion in additional costs for April and May alone.
The exact date for when the U.S.-U.K. trade agreement will take effect has not been disclosed. Officials from both countries stated that negotiations on the final details will continue in the coming months.
Meanwhile, U.S. and Chinese trade officials are scheduled to meet in Switzerland on May 10th, with tensions still high as a 145 percent tariff remains on many Chinese imports.