UK auto sector faces mixed signals as Trump softens US tariffs on car parts

Alejandro Gonzalez

Wed, Apr 30, 2025, 4:05 AM 3 min read

UK carmakers and dealers are weighing the implications of a partial reprieve from US tariffs after President Donald Trump signed two executive orders easing the immediate burden of his 25% duties on imported auto components, the finance press reported.

The change allows carmakers with US production facilities to reduce import tax liabilities on foreign-made parts, using a calculation based on vehicle sales volumes and pricing.

Under the revised rules, manufacturers can offset tariffs on imported components equivalent to 3.75% of a vehicle’s Manufacturer’s Suggested Retail Price (MSRP) until April 2026, falling to 2.5% of total US production through April 2027. The 25% tariff on fully assembled vehicles imported into the US remains in place. The rule is intended to provide relief to businesses for two years as they rework their supply chains, the White House said.

Philipp Sayler von Amende, chief commercial officer at Carwow, described the policy shift as a “last-minute reprieve” for US-based manufacturers but warned that the broader cost burden on UK car exports remains. “The bigger issue remains: a 25% tariff still applies to cars built overseas, which continues to create pressure for UK manufacturers trying to keep British-built vehicles price-competitive for US consumers,” he said.

The Trump administration has positioned the move as a reward for companies investing in US manufacturing. European brands, including Volvo, Audi, Mercedes-Benz and Hyundai – several of which have recently shifted more production to the US – stand to benefit.

However, UK firms, with fewer existing US assembly operations, remain more exposed to higher import duties.

Sayler von Amende told reporters that the tariff adjustment was unlikely to bring immediate clarity for UK dealers or customers. “The knock-on effects aren’t yet fully clear,” he said. “But the last three weeks have highlighted just how globally interconnected the car industry is… when financial market realities bite and intense supply chain pressure and fierce corporate lobbying converge, they can outweigh the headlines of political theatre.”

The tariff strategy, initially unveiled to push carmakers to reshore production to the US, had drawn heavy criticism from across the North American automotive sector. Industry leaders had lobbied intensively for a rollback, warning of serious disruption to an integrated production network that spans the US, Canada and Mexico.

Trump, speaking ahead of a visit to Michigan, acknowledged the partial concession was aimed at avoiding near-term supply disruption. “If they can’t get parts, we didn’t want to penalise them,” he said. “We just wanted to help them.”