President Donald Trump and Prime Minister Keir Starmer have revealed a new trade agreement reducing the tariff on vehicle imports. The duty, which had been set at 27.5% since April 3, will now drop to 10%, a change that could provide relief to luxury car manufacturers.
Under the newly established pact, the UK can export up to 100,000 vehicles to the U.S. at a reduced 10% tariff. However, any additional imports exceeding the limit within the year will incur a higher 25% duty. The agreement is flexible and could be adjusted as discussions between the two nations progress.
The allotted quota closely matches the number of vehicles the UK shipped to the U.S. in the previous year. As reported by the UK’s Society of Motor Manufacturers and Traders, British automobile factories sent 101,000 vehicles to the United States last year. In the first quarter of 2025 alone, 30,200 cars have already been exported from the UK to the U.S., with the majority consisting of premium or luxury models.
The 25% tariff on vehicle imports was then extended to auto parts last week, affecting Britain’s single largest export to the U.S. The shift has disrupted the car market, which generated approximately $12 billion for the UK economy last year.
The UK may view the new 10% auto tariff as a welcome reduction from the previous 27.5% levy. Last month, British automakers such as Jaguar Land Rover and Aston Martin temporarily halted vehicle shipments to the U.S. to mitigate the impact of tariffs.
Alongside reducing tariffs on imported vehicles, President Trump also decided to eliminate duties on British aluminum and steel, a move that could help stabilize the UK’s steel industry. In April, the UK government took control of British Steel to prevent its collapse.
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