UK mulls cutting US car tariffs to land trade deal
April 24, 2025 by Siobhan Doyle
Car changing is a big deal
Chancellor Rachel Reeves has said the government is open to lowering tariffs on US car imports to broker a trade deal with the Trump administration.
The Chancellor of the Exchequer said she wants “to see tariff and non-tariff barriers reduced between the UK and the US,” as the government seeks to lower trade taxes imposed by President Donald Trump.
A document circulating among US business groups and unions is seeking views on a potential deal with the UK. This deal is focused on lowering UK tariffs on US cars to 2.5% from their current 10%.
If the UK cuts the US car tariffs, Britain would expect to see Trump cut his already imposed 25% tariff on UK car imports to America.
One official said the idea, first reported by the Wall Street Journal, was feasible and could be achieved without the UK having to cut tariffs on car imports from other trading partners – particularly China, which the US has heavily imposed tariffs on.
When asked if the UK was willing to cut its tariffs on the US to 2.5% as part of an agreement, Reeves said she would not give a “running commentary” on the numbers and that the UK was “not going to rush into a deal”.
A spokesperson for the UK Prime Minister was also tight-lipped when questioned about the report, but refused to rule out lowering tariffs on US automotive imports as part of a trade deal.
“We’re having trade talks with the US to seek to reduce barriers to trade between the UK and the US so I’m not going to get ahead of those talks,” they told reporters. “But obviously we’re having constructive discussions with the US.”
Reeves also said the government was confident that working with our partners in the US we can get a better trading relationship and build on the substantial trade that already exists between the two countries. “We want to get the right deal for Britain, to better support our industry, our jobs and consumers,” she added.
What are tariffs?
A tariff is a tax on imports imposed by the government and typically paid by the company importing the goods – in this context, cars. Tariffs are usually calculated as a percentage of the value of the imported goods. For example, a 25% tariff on a £20,000 imported car would add £5,000 to its cost.
While tariffs are meant to protect domestic businesses, consumers may end up paying more for cars if importers pass on the higher costs instead of absorbing them or reducing imports.
US carmakers – including General Motors and Ford – have previously urged the president to exempt imported cars and vehicle parts from tariffs.
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