The United Kingdom is calling for an exemption from the United States’ recently proposed 25% tariff on car imports. This request arrives at a time when tensions over international trade are escalating. Last year, the US imported roughly eight million cars. These car imports contribute to about $240 billion (£186 billion) in trade deficit, which accounts for about 70% of the nation’s trade deficit. UK car exports are worth an estimated £7.6 billion annually. Given that the US is the UK’s largest market after the European Union, this proposed tariff would have a significant impact on UK exports.
At least in terms of finished vehicles, last year Mexico supplanted Canada as the top supplier of cars to the US. In order, South Korea, Japan, Canada and Germany were next. The UK already enjoys a strong trading relationship with the US. Though often more well-behaved these days, it still lurks – ready to bite back on occasion. Sources from Number 10 Downing Street have confirmed that the UK would not hesitate to take necessary actions should tariffs be imposed.
The Society of Motor Manufacturers and Traders (SMMT) is one of the UK’s primary automotive lobby groups. It is for this reason that it has raised objections to the proposed tariffs. The SMMT stated that the announcement from former President Donald Trump was “not surprising but, nevertheless, disappointing.” The zero-interest loan, announced last December, is intended to protect the UK’s automotive sector from further impacts.
For the moment, U.S. and Mexican officials are reportedly in communication to avoid imposing these tariffs. The UK government is actively negotiating for an exemption to ensure that its car exports remain competitive in the US market. The result of these negotiations may have tremendous impact on the automotive industries on both sides of the Atlantic.