UK-US Auto Deal

Trade Deal Impact

Well, it looks like there’s a shakeup in the auto industry with a new trade deal between the U.S. and the U.K. This agreement aims to reduce tariffs on U.K. car imports to just 10% down from 27.5%, which could be a real game-changer for brands like Jaguar Land Rover. But don’t get too excited just yet; the new rates still have a cap of 100,000 cars per year. Jaguar Land Rover, as the top exporter to the U.S. from the U.K., delivered around 95,000 cars to this side of the pond last year. All in all, the U.K. sent over about 102,000 vehicles to the U.S. in 2024—so you can see how this new cap might put a lid on any big expansion plans.

Beyond vehicles, there’s good news for U.K. products like steel and aluminum, as their import tariffs drop to zero but within certain quotas. On the flip side, the U.K. has decided to completely waive off the 19% tariff on imported U.S. ethanol—this aligns well with their fuel policy, since the UK rolled out E10 petrol, which has ethanol content up to 10%, back in 2021.

Automaker Concerns

This deal, however, isn’t being welcomed with open arms by everybody. U.S. domestic carmakers—Ford, Stellantis, and GM—represented by the American Automotive Policy Council, aren’t exactly thrilled. They argue that the trade landscape is already quite intertwined with Canada and Mexico through the USMCA (United States-Mexico-Canada Agreement), so why the sudden shift towards the U.K.?

Matt Blunt, who heads the American Automotive Policy Council, has been vocal about it, stating that importing a U.K. vehicle with little American content might actually become cheaper compared to vehicles coming from our North American neighbors under the USMCA. It’s a tough pill to swallow for the U.S. automakers, who prefer to see their long-term partners in Canada and Mexico get these kinds of incentives first.

Meanwhile, this relief deal is a breath of fresh air for the U.K., whose car exports to the U.S. were valued at around $11.9 billion, sustaining a significant number of jobs. Jaguar Land Rover’s CEO, Adrian Mardell, has welcomed the deal, seeing it as bolstering business certainty.

Final Remarks

This tariff reduction marks a first-of-its-kind agreement between the U.S. and another nation. While the American Automotive Policy Council is wary of this preferential treatment towards British cars, fearing it might influence future deals with Asian and European automakers, the real impact of this deal might not be as extensive as some might think. You see, brands like Jaguar Land Rover specialize in the luxury segment, which doesn’t exactly cater to the masses, meaning their market reach will remain limited. It’s more about prestige than numbers for now.