Can the UK-EU trade deal – together along with recent agreements with the US, India, and Asia-Pacific nations – deliver a real breakthrough for British car manufacturers?
Progress in the latest round of UK-EU trade talks has sparked cautious optimism in the British automotive sector.
A bespoke agreement now protects British steel exports from restrictive EU tariffs, saving the UK steel industry an estimated £25m a year.
Combined with plans to link the UK and EU carbon markets, a long-standing goal, these developments signal a more collaborative tone and a tangible step toward easing the cost pressures manufacturers have faced since Brexit.
The Society of Motor Manufacturers and Traders (SMMT) summed it up well: “The EU remains the UK automotive industry’s largest and closest trading partner,” and deepening this relationship is not just welcome – it’s essential.
Tariff protection on steel is significant for car manufacturers already grappling with global price volatility and supply chain disruption.
Aligning carbon markets, meanwhile, could finally stabilise emissions-related costs, offering much-needed predictability as the industry transitions to net zero.
But let’s not be under any illusions. While the tone has improved, major risks remain. Chief is the issue of rules of origin. If not addressed, new requirements from 2027 could see British-made electric vehicles (EVs) face 10% tariffs when exported to the EU, a potentially devastating blow just as UK firms scale up EV production.
Here lies a more uncomfortable truth: if the UK wants smoother trade with the EU, it must cooperate on regulation, customs, and supply chain standards. Sovereignty matters, but so does market access. Manufacturers can’t operate on uncertainty or political ambiguity; they need a clear, stable framework.
That said, the EU isn’t the only game in town. Recent progress on trade deals with India and the United States opens up new growth avenues. India, one of the world’s fastest-growing car markets, is set to cut import tariffs on a limited quota of UK-built vehicles from over 100% to just 10% – a move expected to drive demand for luxury British brands like Aston Martin, Bentley, Rolls-Royce, and Jaguar Land Rover (JLR). With JLR owned by India’s Tata Motors, the group is particularly well-placed to benefit.
The UK-US tariff deal, signed on 16th June, confirms a 10% cap on tariffs for the first 100,000 UK-built cars exported annually – a significant rollback from the 27.5% rate imposed earlier this year. While this provides relief for most current exports, the quota still acts as a ceiling on growth.
Crucially, the deal does not resolve the 25% steel and aluminium tariffs, and unless a broader agreement is reached by July 9, those duties could double to 50%, severely impacting British steelmakers.
In December last year, the UK joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a major free trade bloc spanning 12 economies and accounting for 15% of global GDP. For UK-based car makers and suppliers, this offers a chance to diversify exports and reduce costs in high-growth markets.
Nearly all UK goods exported to CPTPP countries are eligible for zero tariffs, including vehicles and components. This is especially impactful in Malaysia, where tariffs of up to 30% on UK car exports will be phased out within seven years, and tariffs on engine parts within five. The UK’s accession is forecast to boost motor vehicle exports to the region by £712m – the biggest gain of any UK manufacturing sector.
That said, trade access alone isn’t enough. Deals like CPTPP must be backed by meaningful investment in UK-based EV and battery production – the missing link in our industrial strategy.
So, can trade deals reinvigorate UK car manufacturing? Yes – but only as part of a joined-up approach. Tariff-free access to global markets is vital, but without domestic investment, supply chain resilience, and regulatory alignment, these agreements may amount to little more than headline wins.
The SMMT is right to call for “an unequivocal commitment to avoid tariffs on all products, improve customs cooperation and enhance our regulatory partnership.” These aren’t add-ons – they are the foundations of competitiveness in a global market.
The latest UK-EU deal is a step forward. But for British manufacturing to truly thrive, we need more than diplomatic progress. We need a clear, long-term industrial strategy built on investment, electrification, and trade agreements that deliver real, measurable outcomes.
Only then can we truly put the UK automotive industry back in the fast lane.
Fraser Brown is founder and managing director of MotorVise
After years of post-Brexit uncertainty, could the UK car industry finally be shifting out of neutral?
Fraser Brown
June 17, 2025
Opinion & Commentary
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Can the UK-EU trade deal – together along with recent agreements with the US, India, and Asia-Pacific nations – deliver a real breakthrough for British car manufacturers?
Progress in the latest round of UK-EU trade talks has sparked cautious optimism in the British automotive sector.
A bespoke agreement now protects British steel exports from restrictive EU tariffs, saving the UK steel industry an estimated £25m a year.
Combined with plans to link the UK and EU carbon markets, a long-standing goal, these developments signal a more collaborative tone and a tangible step toward easing the cost pressures manufacturers have faced since Brexit.
The Society of Motor Manufacturers and Traders (SMMT) summed it up well: “The EU remains the UK automotive industry’s largest and closest trading partner,” and deepening this relationship is not just welcome – it’s essential.
Tariff protection on steel is significant for car manufacturers already grappling with global price volatility and supply chain disruption.
Aligning carbon markets, meanwhile, could finally stabilise emissions-related costs, offering much-needed predictability as the industry transitions to net zero.
But let’s not be under any illusions. While the tone has improved, major risks remain. Chief is the issue of rules of origin. If not addressed, new requirements from 2027 could see British-made electric vehicles (EVs) face 10% tariffs when exported to the EU, a potentially devastating blow just as UK firms scale up EV production.
Here lies a more uncomfortable truth: if the UK wants smoother trade with the EU, it must cooperate on regulation, customs, and supply chain standards. Sovereignty matters, but so does market access. Manufacturers can’t operate on uncertainty or political ambiguity; they need a clear, stable framework.
That said, the EU isn’t the only game in town. Recent progress on trade deals with India and the United States opens up new growth avenues. India, one of the world’s fastest-growing car markets, is set to cut import tariffs on a limited quota of UK-built vehicles from over 100% to just 10% – a move expected to drive demand for luxury British brands like Aston Martin, Bentley, Rolls-Royce, and Jaguar Land Rover (JLR). With JLR owned by India’s Tata Motors, the group is particularly well-placed to benefit.
The UK-US tariff deal, signed on 16th June, confirms a 10% cap on tariffs for the first 100,000 UK-built cars exported annually – a significant rollback from the 27.5% rate imposed earlier this year. While this provides relief for most current exports, the quota still acts as a ceiling on growth.
Crucially, the deal does not resolve the 25% steel and aluminium tariffs, and unless a broader agreement is reached by July 9, those duties could double to 50%, severely impacting British steelmakers.
In December last year, the UK joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a major free trade bloc spanning 12 economies and accounting for 15% of global GDP. For UK-based car makers and suppliers, this offers a chance to diversify exports and reduce costs in high-growth markets.
Nearly all UK goods exported to CPTPP countries are eligible for zero tariffs, including vehicles and components. This is especially impactful in Malaysia, where tariffs of up to 30% on UK car exports will be phased out within seven years, and tariffs on engine parts within five. The UK’s accession is forecast to boost motor vehicle exports to the region by £712m – the biggest gain of any UK manufacturing sector.
That said, trade access alone isn’t enough. Deals like CPTPP must be backed by meaningful investment in UK-based EV and battery production – the missing link in our industrial strategy.
So, can trade deals reinvigorate UK car manufacturing? Yes – but only as part of a joined-up approach. Tariff-free access to global markets is vital, but without domestic investment, supply chain resilience, and regulatory alignment, these agreements may amount to little more than headline wins.
The SMMT is right to call for “an unequivocal commitment to avoid tariffs on all products, improve customs cooperation and enhance our regulatory partnership.” These aren’t add-ons – they are the foundations of competitiveness in a global market.
The latest UK-EU deal is a step forward. But for British manufacturing to truly thrive, we need more than diplomatic progress. We need a clear, long-term industrial strategy built on investment, electrification, and trade agreements that deliver real, measurable outcomes.
Only then can we truly put the UK automotive industry back in the fast lane.
Fraser Brown is founder and managing director of MotorVise
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