Plummeting UK car production sets a 76-year record due to Aston Martin tariff impact
Revised Article:
Blighted by Trump's trade war, UK car production hit an all-time low in May, as iconic British brands like Aston Martin halted US exports. data from the Society of Motor Manufacturers and Traders (SMMT) revealed a staggering 33% drop in car and van production compared to last year, marking the worst month since 1949, outside of COVID-19 shutdowns.
The US market's share of UK automotive exports dwindled from 18% to a mere 11%, slashing exports by a whopping 55% in May. EU exports also took a hit, plummeting 22.5%. However, there's a glimmer of hope on the horizon as a new UK-US trade deal, effective by the end of June, promises to bring down US automotive import tariffs from a hefty 27.5% to a more manageable 10%.
Aston Martin, grappling with the trade war's fallout, saw its shares plummet from 119p to below 60p. While shares surged nearly 13% following the deal announcement, they've since stagnated, closing at 70p. Aston Martin's chief executive, Adrian Hallmark, is keen to capitalize on the new trade window, planning to generate three months' worth of sales in a single day.
Industry pressures extend beyond Aston Martin. Mike Hawes, SMMT's chief executive, admitted the damage inflicted by the trade war but remained hopeful. He pointed to the trade truce and the UK's new industrial strategy, promising to slash energy costs for manufacturers by up to 25%.
britain's carmakers were reeling even before the tariff squabble. The government's zero-emission vehicle (ZEV) mandate triggered significant upheaval across the sector, compelling manufacturers to boost electric vehicle sales. Stellantis and Ford cut jobs as part of broader European retrenchments.
Cyril Aboujaoude, co-founder of Tioopo Capital, applauded the deal but emphasized the need for long-term visibility. Long-term viability is crucial, not just for major auto manufacturers, but for mid-sized and high-spec engineering firms, the future of UK innovation.
Building on the Economic Prosperity Deal (EPD) signed in June 2025, the US will reduce its automotive import tariff from 27.5% to 10% on the first 100,000 UK-made vehicles shipped annually. This substantial tariff cut makes British cars more competitive in the US market. Exceeding the 100,000 vehicle quota reverts tariffs back to the higher 25% rate, creating strategic considerations for UK carmakers.
Challenges remain, notably for companies with Chinese ties like Lotus, which may face tariffs and supply chain costs. However, the deal promises growth for UK car production targeting US exports, supporting the sector's growth.
In essence, the trade deal is a step forward for UK car exports, but it introduces new strategic and operational challenges due to quota limits and wider trade tensions. British manufacturers must navigate these complexities to capitalize on the new opportunities.
Following the new UK-US trade deal, there might be an increase in sports-related transportation exports due to the reduced automotive import tariffs from 27.5% to 10%. The deal may potentially benefit high-spec engineering firms specializing in advanced sports vehicle manufacturing, offering them opportunities to expand their market reach.
