Lotus is in the midst of a radical re-orientation of its production. The company is considering moving most of its operations from its near century old base in the UK to a new factory in the US. This announcement is a welcome one amid continued mounting pressures from recent poultry and automotive tariffs.
The company’s production facility in Hethel, Norfolk, is being disrupted by the protests. This is a direct result of new tariffs of 25 percent on vehicles that are exported to the US. As it stands, Lotus exports about 100,000 vehicles per year to the US, which is a pretty important market for the brand. A 25% tariff on imports of automobiles and auto parts has further complicated matters. We’re starting to see the heavy hand of this tax start to rock the market. Prior to this modification, Lotus was subject to a 2.5% import tariff on car imports. The new rules have made the company reconsider where it can afford to operate.
In April, Lotus announced plans to cut 270 jobs as part of its effort to navigate “volatile and evolving market conditions including the US tariffs.” Should the company move to cease operations in the UK, it would leave 1,300 jobs at its Hethel HQ under threat. The possible move of production only deepens the worry for these workers.
The current tariff structure is an intricate, confusing web for Lotus to navigate. Without the trade deal, the company would have been subject to a mind-boggling 27.5% levy on UK-made products exported to the US. A recent trade agreement between the UK government and the Trump administration ensures UK-made cars would be subject to a lower 10% tariff. This new tariff only applies to the initial 100,000 UK vehicles imported into the US annually. Importantly, though, this lower tariff won’t come into effect until the end of June. Until then, Lotus has to deal with being charged higher rates.
Despite these challenges, Lotus has been clear that it is committed to keeping at least part of its production in the UK.
“We remain committed to the UK,” – Lotus
That move to US production, if it happens, signals some very key strategic business decisions. It illustrates how international trade policies can play a role in reshaping local job markets and the nature of manufacturing. The automotive industry proved extremely agile when it came to shifting tariffs and economic pressures. Lotus’s next moves will be watched very closely by industry stakeholders and employees alike.