Trump’s 10% concession on UK car exports offers relief – but is it built to last?

While industry insiders have welcomed the move to reduce US tariffs on British-made cars as a lifeline for manufacturers, concerns are growing that this is a temporary fix to a deeper problem – with ripple effects already altering global vehicle supply chains.

President Donald Trump last week announced his administration was slashing tariffs on UK-made cars from 27.5% to 10% on the first 100,000 vehicles exported annually to the United States.

Fraser Brown, of automotive consultancy MotorVise, said he welcomes the “rare” win for UK carmakers but is quick to caution that this isn’t a return to free trade. “It’s a quota-based concession,” Brown says, “offering short-term relief that could become a brake on long-term growth.”

For brands such as Jaguar Land Rover (JLR) and Mini, which maintain strong sales across the Atlantic, the 10% tariff offers a genuine competitive edge just as margins are being squeezed by the electric vehicle (EV) transition and supply chain volatility.

High-end manufacturers like Bentley, Rolls-Royce, McLaren, and Lotus also stand to benefit, given their affluent transatlantic customer base.

Short-term fix, long-term risk

In 2023, the UK exported approximately 101,000 vehicles to the US, meaning nearly all exports now qualify for the lower tariff. As a result, British-built vehicles become instantly more attractive in the American market.

Treasury Minister Darren Jones called the move a job-saver, while JLR - which was reported to be poised to cut jobs if the outcome was negative - confirmed that it offers greater certainty for the sector.

However, Brown warns of the ceiling effect. “If UK exports creep above 100,000 units, those extra vehicles are immediately slapped with the full 27.5% tariff,” he explains. “In effect, the quota punishes success. It’s not a sustainable foundation for trade growth.”

The removal of Trump-era 25% tariffs on British steel and aluminium is another key win, potentially lowering production costs and encouraging investment in UK component manufacturing.

But as Brown points out, the backdrop is anything but calm. EU-US trade tensions continue to escalate, with Brussels threatening retaliatory measures on €95 billion worth of US goods in response to proposed tariffs on EU car imports.

The UK, now outside the EU but still tightly connected through European supply chains, could find itself collateral damage in a geopolitical trade crossfire.

Redirection opportunity

While industry experts unpack the implications of the US quota, the UK market may unexpectedly benefit from a global reshuffling of supply chains.

Mike Fazal, CEO of Leasing.com, believes the UK’s growing appetite for EVs and premium vehicles, combined with a robust leasing sector, positions it well to absorb any redirected inventory.

“More cars here mean more choice, quicker delivery, and better leasing deals for British drivers,” he adds. “We’re already seeing signs that the UK could become a key alternative market for European and global brands.”

This could result in an influx of vehicles from major players like BMW, Mercedes-Benz, Volkswagen, and Volvo, which may now reconsider their reliance on US sales. “Manufacturers know they can’t put all their eggs in one basket anymore,” Fazal says. “The last few weeks have been a wake-up call.”

The new normal?

Even with potential tariff relief locked in for a portion of UK exports, the events of recent months have highlighted the fragility of the international trade.

“Tariffs and trade deals may seem far removed from everyday car buying,” says Fazal, “but they have real consequences on what drivers can get and what they’ll pay. Our job is to help them navigate that – and take advantage when the balance shifts in their favour.”

In the short term, the UK automotive sector has reason to celebrate although as Brown notes, unless a broader, more durable trade framework is established, British manufacturers remain at the mercy of "quotas, shifting alliances, and unpredictable politics".

“This deal shows what quiet negotiation can achieve,” Brown reflects. “But it also proves that trade under Trump is transactional, tactical, and time-limited.”