UK Car Tariff Cut Inches Closer to US Implementation
Published On: June 23rd, 2025
The United Kingdom and the United States are now preparing to implement a trade agreement that will lower tariffs on British-made vehicles shipped to the U.S. from 25% to 10%, up to a cap of 100,000 cars per year. The deal was negotiated earlier in 2025, but at the G7 summit on June 16, Prime Minister Keir Starmer confirmed that the U.K. had completed its share of the implementation. The final step now rests with the U.S., which is expected to issue a formal proclamation in the coming days.
For British carmakers, this represents a major opportunity to maintain competitiveness in the American market. The 100,000-vehicle quota closely mirrors 2024’s export volume—about 92,000 units—meaning most current trade levels will qualify for the reduced rate. Any exports beyond that threshold will continue to face the full 25% tariff.
The agreement also reduces duties on U.K.-origin automotive parts, provided they meet origin rules. This could ease costs for manufacturers operating transatlantic supply chains, especially those assembling vehicles with British components like engines, drivetrains, or electronics.
Carmakers like Jaguar Land Rover, Bentley, and Aston Martin are likely to benefit most, as many of their models fall within the high-end segment where price sensitivity is tied closely to import duties. JLR, which previously warned of a potential £1.6 billion tariff burden, welcomed the deal as a lifeline to protect U.S. sales.
American automakers, on the other hand, have expressed concerns. Some argue the deal gives British brands a price advantage without a corresponding requirement for local production or job creation in the U.S. The tariff reduction may allow imported luxury vehicles to undercut domestically assembled models, particularly in premium categories.
For consumers, the lowered tariffs could translate into better prices on imported vehicles, depending on how manufacturers pass on the savings. At the very least, buyers may see more British models reach U.S. showrooms at competitive pricing. But broader market impact will hinge on supply availability and how quickly the U.S. moves forward with formal adoption.
Beyond the immediate implications for trade, the agreement points to a growing trend: targeted bilateral deals that bypass the slower pace of multilateral trade negotiations. Both the U.S. and U.K. are pursuing similar carve-outs in sectors like aerospace and technology, with auto trade now joining the list.
Final implementation is still pending on the U.S. side, and talks continue around related steel and aluminum tariffs, which were not resolved at the G7. But the automotive provisions appear close to taking effect, offering much-needed clarity for carmakers navigating a volatile global trade environment.