Britain in Talks With Washington Over Auto Tariff Carve-Out
Britain is intensively negotiating with the United States to obtain an exemption from President Donald Trump’s impending 25% auto tariffs. Finance Minister Rachel Reeves said Thursday that London believes it deserves a carve-out, citing mutual trade surpluses distorted by statistical differences between the countries.
Reeves also revealed that the government is considering revising electric vehicle (EV) incentives that currently benefit Elon Musk’s Tesla. The U.S. auto giant, owned by Trump ally Musk, may lose access to these subsidies as part of broader efforts to support domestic automakers such as Jaguar Land Rover, Rolls Royce, and Aston Martin.
Tariffs Set to Begin April 3
The 25% U.S. tariffs on imported cars and light trucks are scheduled to go into effect on April 3. Reeves acknowledged the time crunch, stating, “We’ve got a few more days left of those negotiations before these tariffs are due to come in.”
Trump’s move coincides with a wider trade agenda, including reciprocal tariffs targeting countries blamed for the U.S. trade deficit. British officials worry these measures could severely harm UK exports, particularly in the automotive sector.
Starmer: All Options on the Table
Prime Minister Keir Starmer echoed Reeves’ remarks, saying from Paris that the UK government would keep all options open in response to the new tariffs. “The industry doesn’t want a trade war but it’s important that we keep all options on the table,” he said.
According to the Society of Motor Manufacturers and Traders (SMMT), the U.S. is Britain’s second-largest market for cars, behind only the EU, accounting for nearly 20% of exports.
Tesla’s UK Incentives Under Review
Reeves also addressed the Zero Emission Vehicle (ZEV) mandate, a UK scheme that allows all-electric carmakers like Tesla to sell emissions credits to less-compliant manufacturers. Canada recently froze its own subsidies to Tesla, a move London may emulate.
“We are looking at the zero emission vehicle mandate, which is why some of that money goes to Tesla, and looking at how we can better support the car manufacturing industry in the UK,” Reeves explained.
Tech Deal Talks as Alternative Shield
Beyond tariff talks, the UK has also pursued a tech-focused agreement with the U.S. that could shield some sectors from retaliatory duties. However, the scope of such a deal remains uncertain as trade tensions escalate globally.
