As much as President Donald Trump loves tariffs, markets love trade deals that normalize relations between the U.S. and its allies.
On Thursday, all three major indices gained at least 1% after the U.S. announced an outline for a trade deal with the United Kingdom.
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While the president says that final details of the plan are still “being written up,” he also said UK Prime Minister Kier Starmer would fast-track U.S. goods into the UK and further reduce non-tariff barriers.
The United States is the UK’s largest trading partner, with business between the two countries (imports and exports) rising nearly 4% last year to £314.6 billion ($416.8 billion). The U.S. accounted for about 18% of total UK trade.
Cars accounted for about 5% of the UK’s total exports to the U.S. in 2024, making automotive the largest UK export to the States.
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In 2024, the UK exported £9.0 billion ($12 billion) worth of cars to the U.S., accounting for 24.7% of the country’s total car exports. The U.S. is Britain’s top trade partner in the car sector.
China, the UK’s second-largest foreign car market, buys about $5.6 billion worth of cars from the UK every year, according to the UK Office for National Statistics.
The UK imported over $12 billion worth of cars into the U.S. last year.
Image source: Stollarz/AFP via Getty Images
Car tariffs get a nice cut
If you are a U.S.-based fan of luxury UK brands like Bentley, Jaguar, Land Rover, or McLaren, rejoice, because the deal between the two countries will make the price tags for those vehicles slightly more reasonable.
The UK exported about 102,000 vehicles to the U.S. in 2024. The average cost to ship a car to the US from the UK is about £1,205 ($1,597), according to AutoShippers. Much of that cost is often passed on to the consumer.
The Trump administration had placed 25% import taxes on cars coming from overseas on top of the existing 2.5% duty. That number was cut to 10% on a maximum of 100,000 vehicles; any cars exported above that level are subject to the 27.5% import tax.
This deal structure could be similar to what other countries can negotiate with the White House.
US car industry gets more good news
President Donald Trump has softened his stance on the tariffs in the automotive sector in recent weeks.
The auto industry was among the first to get carveouts from the original tariff package. Its supply chain is globally integrated and impossible to detangle in the short term.
The U.S. auto industry has been lobbying the administration for months. In March, the President gathered some of the country’s top carmakers for a conference call, warning them not to raise prices in response to the tariffs, according to reports.
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Days after the report was published, President Trump told NBC News that he “couldn’t care less” if automakers raised their prices and denied the Journal report.
When asked about his message to automakers, Trump said, “The message is ‘congratulations.’ If you make your car in the United States, you’re going to make a lot of money. If you don’t, you’re going to have to probably come to the United States because if you make your car in the United States, there is no tariff.”
The White House is keeping the 25% tax on finished imported vehicles but preventing other levies from “stacking” on top of it. Thus, carmakers won’t have to pay separate tariffs for imported steel and aluminum.
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The move is retroactive, so any company that paid tariffs on these items in recent weeks will be reimbursed.
A separate 25% tariff on imported auto parts went into effect May 3, but the administration is also modifying these taxes.
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