Tithe UK car exports to the United States now enjoy a massive boost after a recently struck tariff agreement. In fact, last year the UK exported just under 100,000 cars to the US. This extraordinary amount accounted for 18.1% of all UK car exports in July. This is a big deal. This comes after a rocky few years for UK car production, having recently crashed to its lowest ebb since 1953.
The joint tariff deal negotiated last month reduced the import tax on cars from the UK to 10%, down from 25%. It went into effect at the end of June. Trump himself proposed a high import tariff back in April. As JLR continued to struggle with production bottlenecks, it recently announced an end to shipments to the US. JLR resumed exports, reacting to the positive change in tariff landscape.
The European Union is still an extremely important market for UK car manufacturers. It represents a staggering 45.6% of their automobile exports. UK car manufacturing is down 11.7% so far this year. This decline is disheartening and it points to the continued realizations of the struggles that the entire industry is grappling with today.
In July, UK car production increased for the second straight month. More recently, domestic sales have surged, and exports have exploded upward as well. This includes a boom in exports of British-manufactured automobiles to the US since the tariff agreement was finalized.
“Given this backdrop, another month of growing car output is good news.” – Mike Hawes, SMMT chief executive
The tariff cut only goes on the first 100,000 cars that get exported to the US. After this threshold, all imports will be subject to the initial tax rate of 25%. This component of the agreement highlights the cautious optimism for the future of US-UK trade relations in the automotive industry.
So what has led to the current slump in UK car manufacturing? Rising labor costs, greater competition from overseas markets and all of the confusion caused by Brexit have been equally important. These issues still loom heavily over the industry as it heads into an uncertain landscape filled with changing consumer confidence and delicate trade relations.
Colleen McHugh, chief investment officer at Wealthify, emphasized the significance of the US market by stating it is “an important market for British-built cars.” This assertion reflects the ongoing importance of international trade agreements in shaping automotive manufacturing strategies.
As the UK automotive sector moves forward, industry leaders remain vigilant and hopeful for sustained recovery amidst an ever-changing landscape.
“It remains a turbulent time for automotive manufacturing, with consumer confidence weak, trade flows volatile and massive investment in new technologies underway both here and abroad.” – Mike Hawes, SMMT chief executive