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Impact of the New Tariff Deal on British Car Exports

British cars, like the much-loved Range Rover SUVs, are about to face friendlier terms when exporting to the US. Thanks to a new agreement, these vehicles will no longer incur a hefty 25% tariff. This makes the UK the only country to have such a deal with the US, but there’s a catch.

Under this arrangement, the US will allow 100,000 British cars to enter with a reduced 10% tariff. However, any imports beyond this limit will still face the higher 25% rate.

In the year leading up to the third quarter of 2024, UK vehicle exports to the US were valued at over $12.2 billion (£9 billion), according to data from the UK trade department. Jaguar Land Rover, a leading UK automaker, sells nearly a quarter of its cars in the US market. The company has noted that this agreement provides "greater certainty for our sector," which is essential for future planning and investment.

For car parts, the agreement alters the previous terms slightly. Now, parts made in the UK for UK cars will also see tariffs drop from 25% to 10%, but there are no limits on the number of parts that can be imported at this lower rate.

Jonathan Reynolds, the UK’s Business and Trade Secretary, emphasized the positive impact of this deal. He stated that it aims to protect UK workers and businesses. “We agreed this deal with the US to ensure jobs and livelihoods in some of our most vital sectors were protected,” he mentioned, highlighting the importance of the automotive industry.

As these changes take effect, experts believe the car industry may experience a renaissance, making British exports more attractive and competitive. According to a recent survey, 68% of automotive companies in the UK feel optimistic about their growth prospects post-deal, citing increased sales in markets like the US.

In the shifting landscape of global trade, this agreement signals a significant change for the British automotive sector, hopefully paving the way for more innovation and job creation in the industry.

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