The UK and the United States have agreed a landmark deal to secure better trading regulations for British car makers in a historic move.
Sir Keir Starmer has confirmed that manufacturers exporting vehicles to the United States will now face a 10 per cent tariff, down from 27.5 per cent.
President Donald Trump initially launched the "Liberation Day" tariffs in April, despite warnings from British manufacturers that it could hammer production and profits.
Labour estimates that manufacturers will now save hundreds of millions of pounds every year, while also protecting thousands of jobs.
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Prime Minister Keir Starmer said the trade deal would provide backing to the UK car industry
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The tariff will come with a quota of 100,000 vehicles exported to the US in a 12-month period, although this is slightly lower than the number of exports in the previous year.
Speaking after a significant phone call with the President, the Prime Minister said the 100,000 limit was not fixed, adding that the Government could renegotiate with the US.
Any vehicles exported to the US over the 100,000 quota will be exposed to duties of 27.5 per cent.
Commenting on the deal, Starmer said: "Our historic trade deal with the United States delivers for British businesses and protects UK jobs.
The PM said the tariff deal on auto exports to the US could be renegotiated in the future
PA"From today, our world-class automotive and aerospace industries will see tariffs slashed, safeguarding key industries that are vital to our economy.
"We will always act in the national interest - backing British businesses and workers, delivering on our Plan for Change."
President Trump issued Executive Order 14309 on June 16, 2025, following a transitional agreement on May 8.
The "first-of-a-kind trade agreement" was backed by Jaguar Land Rover, where the Prime Minister took the phone call with President Trump.
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Adrian Mardell, CEO of JLR, highlighted how vital the car industry was to the UK's economy, supporting 250,000 jobs, noting that the deal was "warmly welcomed".
He continued: "We would like to thank the UK and US Governments for agreeing this deal at pace and look forward to continued engagement over the coming months."
Similarly, Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), described the deal as a "huge relief" for the automotive sector.
Speaking at the International Automotive Summit, hosted by the SMMT, Adrian Hallmark, CEO of Aston Martin Lagonda, said he anticipated that tariffs would be introduced.
Prime Minister Keir Starmer held a phone conversation with President Donald Trump at the JLR factory in the West Midlands
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Aston Martin took the bold step to not ship cars to the United States between April and June, adding that the brand has "half of ideal stock" left.
Hallmark said the brand will invoice three months' worth of sales in just 24 hours following the reduction of tariffs this week.
As part of the historic deal, the aerospace sector has also seen the removal of 10 pr cent tariffs on goods including engines and aircraft parts.
This is expected to provide a major boost to manufacturers like Rolls-Royce, which recently secured deals for 142 new aircraft engines around the world.
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