Starmer and Trump strike trade deal to save UK car industry, but there's a catch…

A trade agreement between the UK and US has been struck, reducing tariffs for exports of British-made cars to America, but there’s a catch – there’s a limit to the number of cars that can be exported before the original tariff is reimposed, stifling the growth of UK carmakers.

In February, President Donald Trump announced sweeping 25 per cent tariffs on foreign-made cars being imported into the US. This caused ructions throughout the UK car industry as America is one of its largest export markets and both Jaguar-Land Rover (JLR) and Aston Martin paused US exports in response.

Now, a deal has been struck between the two nations to reduce tariffs to 10 per cent for the first 100,000 cars exported from the UK to the US each year. Anything over that number will probably incur the 25 per cent tariff originally imposed by the President.

Nevertheless, Trump described the deal as part of “an incredible day for America”, going on to say that it was “so good for both countries”.

It’s worth noting that a 10 per cent tariff is still much heftier than the duties in place during the previous Biden administration. When questioned on this during a speech at JLR’s plant in the West Midlands, Keir Starmer told journalists: “The question we should be asking is, ‘is it better than where we were yesterday?’”

Furthermore, the 100,000-car limit does place a cap on growth somewhat. The UK exported as-near-as-makes-no-difference 100,000 cars to the US last year, meaning that firms won’t have any headroom as it stands to increase sales without heftier tariffs being incurred.

In a statement, the chief executive of the UK’s Society of Motor Manufacturers and Traders, Mike Hawes, said the deal provides some “much-needed relief”. Hawes also remarked that No10 has “recognised the importance of the automotive industry to UK exports and the economy, and has worked tirelessly with US counterparts to strike an agreement”. 

“We hope that [this] will lead to broader and deeper cooperation that reduces barriers to trade still further, charting a path to economic growth for both nations,” he concluded.

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