On Thursday local time, US President Trump announced that the US and the UK had reached their first trade agreement since the announcement of "reciprocal tariffs." Despite claims by Trump administration officials that the US-UK trade deal would bring significant benefits to the US, the US automotive industry has heavily criticized the agreement.
An organization representing Detroit's three major automakers—General Motors, Ford, and Stellantis—criticized the US-UK trade agreement on Thursday, stating that it would harm the US automotive industry.
Under the UK-US trade agreement, UK automakers will receive an annual quota of 100,000 vehicles that can be exported to the US at a 10% tariff rate. This is nearly equivalent to the total number of cars the UK exported to the US last year, while Mexico, Canada, and almost all other countries face a 25% tariff on car imports to the US.
"Under this agreement, importing a car from the UK that contains almost no US parts will be cheaper than importing a car from Mexico or Canada that complies with the USMCA and has half of its parts from the US," the American Automotive Policy Council (AAPC) said. "This hurts US automakers, suppliers, and auto workers."
US automakers are concerned that the US-UK trade agreement could serve as a template for other agreements, putting their cars assembled in Canada or Mexico at a disadvantage.
The organization added that it hoped "the preferential access treatment enjoyed by UK cars relative to North American cars would not set a precedent for future (US) negotiations with Asian and European competitors."
To mitigate the impact of car tariffs on automakers and related industries, Trump signed an executive order at the end of last month, implementing a series of measures, including allowing some compensation for producers who import auto parts and assemble cars in the US. However, a 25% tariff on imported cars remains in place. He also extended the duty-free exemption for auto parts manufactured in Canada and Mexico that comply with the USMCA rules of origin.
However, automakers hope that Trump will reduce car tariffs.
Ford confirmed this week that, due to tariffs, the automaker has raised the prices of three models manufactured in Mexico and stated that Trump's tariff agenda would cost it about $1.5 billion for the full year of 2025.
General Motors said it expects tariffs to cost it between $4 billion and $5 billion, while Toyota estimated tariff costs of about $1.2 billion for April and May.