Crisis in Motion: UK Car Production Hits Historic Low Amid US Tariff Turbulence

UK car production has plummeted to its lowest level in 76 years for the month of May, reaching only 49,810 units. This decline, a staggering drop of nearly one third compared to the previous year, is largely attributed to tariffs imposed by the US that have significantly impacted exports. According to the Society of Motor Manufacturers and Traders (SMMT), these challenges have led to a dramatic halving of exports to the US, where certain UK car manufacturers have been compelled to halt shipments altogether.

The tariffs, which were implemented by President Donald Trump starting in March at a rate of 25% on cars and parts, have created an environment of depressed demand in the US market. Major players like Jaguar Land Rover (JLR) and Aston Martin were particularly affected, with JLR suspending its shipments to the US and Aston Martin cutting back on exports. As a result, the US now represents just over 10% of UK car exports, down from nearly 20%.

Other factors contributing to the export decline include ongoing transitions towards electric vehicle (EV) production. Both JLR and Nissan are in the process of adapting their factories for EV manufacturing, with JLR aiming to shift entirely to electric models.

Despite these obstacles, a recent agreement between the US and UK has reignited hope. Starting at the end of June, import tariffs on 100,000 British cars annually will be reduced from 25% to 10%. This quota aligns with the number of vehicles the UK exported to the US last year, but any excess will incur a 27.5% tax.

In light of these developments, Mike Hawes, chief executive of the SMMT, expressed cautious optimism for the future. He noted that while 2025 has presented many challenges, forthcoming trade deals with key markets, including the US, India, and the EU, alongside governmental support for the industry and a substantial £2.5 billion investment in research and development, could facilitate recovery in the automotive sector.