Key Points
- UK car production in May 2025 fell 32.8% year-on-year to 49,810 units, the lowest May output since 1949, excluding the pandemic-affected 2020.
- The decline marks the fifth consecutive month of falling vehicle output in the UK.
- US President Donald Trump’s 25% tariffs on imported cars and auto parts, imposed in March, triggered a 55% drop in UK auto exports to the US, the UK's second-largest market.
- Exports to the EU, the UK’s largest market, also fell by 22.5%.
- Major manufacturers, including Jaguar Land Rover (JLR) and Aston Martin, suspended or reduced US shipments in response to the tariffs.
- The tariffs caused immediate supply chain disruptions, increased costs, and forced some automakers to consider relocating production to the US.
- A new US-UK trade agreement, announced in May and set to take effect by the end of June, allows up to 100,000 UK-made vehicles to enter the US annually at a reduced 10% tariff.
- Industry leaders, including SMMT chief Mike Hawes, remain cautiously optimistic, citing new trade deals and government support as reasons for hope.
- The UK auto sector continues to face challenges from factory restructuring, the transition to electric vehicles, and broader manufacturing contraction.
- The US-UK Economic Prosperity Deal, signed at the G7 summit, also includes reduced tariffs on aerospace goods and reciprocal concessions in agriculture.
UK auto manufacturing plunged to its lowest May level in 76 years, as sweeping US tariffs imposed by President Donald Trump sent shockwaves through the industry, slashing exports and forcing major British carmakers to halt or cut shipments to the United States. The historic slump, detailed in new industry data, underscores the mounting pressures on Britain's automotive sector amid global trade tensions, supply chain disruptions, and the costly transition to electric vehicles.
Why Did UK Auto Production Hit a 76-Year Low in May 2025?
According to reporting by Reuters, Britain’s vehicle production fell for the fifth consecutive month in May, with output dropping 32.8% compared to the previous year, totaling just 49,810 units. This represents the sharpest percentage decline for May since 1949, discounting the extraordinary disruptions of the COVID-19 pandemic in 2020. The Society of Motor Manufacturers and Traders (SMMT) attributed the decline to a combination of factory interruptions, model changeovers, and, most significantly, the impact of US tariffs.
The BBC’s coverage highlights that the imposition of 25% tariffs by former President Donald Trump in March led to a dramatic reduction in exports to the US, which were effectively cut in half. The SMMT stated that these tariffs “depressed demand, forcing many manufacturers to halt shipments”.
How Did the Trump Tariffs Affect UK Car Exports?
As reported by Emma Curzon of Alliance News, shipments to the US—previously accounting for nearly 20% of UK auto exports—plunged to just above 10% in May, with a 55.4% year-on-year drop. Exports to the EU, the UK’s largest market, also fell by 22.5%.
The BBC’s analysis notes that the Trump administration’s tariffs, announced in March and implemented in April, forced automakers like Jaguar Land Rover (JLR) to suspend US shipments, while Aston Martin scaled back its exports. The SMMT confirmed that “many manufacturers” stopped US shipments immediately after the tariffs took effect.
What Steps Did UK Carmakers Take in Response?
Jaguar Land Rover, owned by Tata Motors, paused all UK vehicle shipments to the US in April to negotiate new trading terms. In a statement cited by The Economic Times, a JLR spokesperson said,
“The USA is an important market for JLR’s luxury brands. As we work to address the new trading terms with our business partners, we are enacting our short-term actions, including a shipment pause in April, as we develop our mid-to longer-term plans”.
Aston Martin, meanwhile, announced a reduction in US shipments to cushion the financial blow of the tariffs, even as the US remains its largest regional market. According to Autoworld Journal, Aston Martin shipped 319 units to the US in Q1 2025, a 5% increase over the previous year, but average selling prices fell 15% due to fewer hypercar sales. CEO Adrian Hallmark continued to implement cost-cutting measures, while Executive Chairman Lawrence Stroll sought new investments and asset sales to stabilize the company.
What Are the Broader Impacts on the UK Auto Industry?
Reuters and TradingView both report that the tariffs have disrupted international supply chains and increased costs for manufacturers by hundreds of millions of dollars, prompting some to consider relocating production to the US to avoid the duties. The SMMT also cited ongoing factory restructuring for electric vehicle production as a contributing factor to the downturn.
The broader UK manufacturing sector contracted in May, with declines in output, orders, and employment, compounding the auto industry’s woes.
What Is in the New US-UK Trade Agreement on Autos?
In a bid to ease the crisis, the US and UK reached a new trade agreement in May, announced at the G7 summit in Canada and set to take effect by the end of June. As detailed by WC Shipping and BDO USA, the deal allows up to 100,000 UK-manufactured vehicles to enter the US each year at a reduced tariff of 10%, down from the 25% rate imposed on other nations. The agreement also eliminates the 25% tariff on British steel exports to America and provides reciprocal concessions for US agricultural products.
Howard Lutnick, US Commerce Secretary, confirmed that the baseline 10% tariff on UK goods will remain in place, but the new quota for autos provides targeted relief to a critical British industry.
How Are Industry Leaders and Policymakers Responding?
SMMT Chief Executive Mike Hawes, quoted by both Reuters and Alliance News, acknowledged that 2025 has been “an incredibly challenging year for UK automotive production,” but expressed cautious optimism for the future. Hawes pointed to “confirmed trade deals with crucial markets, especially the US and a more positive relationship with the EU, as well as government strategies on industry and trade that recognize the critical role the sector plays in driving economic growth” as reasons for hope.
He added,
“With rapid implementation, particularly on the energy costs constraining our competitiveness, the UK can deliver the jobs, growth and decarbonization that is desperately needed”.
What’s Next for UK Carmakers and the Global Auto Trade?
Industry observers note that while the new US-UK trade deal offers immediate relief, the future remains uncertain. The BBC quotes the SMMT as saying the tariffs “should hopefully be a temporary hurdle” for production, with the new agreement expected to facilitate recovery. However, the sector must still navigate ongoing challenges, including the transition to electric vehicles, rising costs, and global economic headwinds.
Aston Martin and JLR, among others, continue to reassess their US strategies, with JLR still evaluating its long-term response to the changed trading environment. The industry’s ability to adapt—through new investments, trade pacts, and restructuring—will determine whether it can recover from this historic slump.
In summary, the UK auto industry faces its most severe crisis in decades, battered by US tariffs, falling exports, and structural change. Yet, with new trade agreements in place and industry leaders voicing cautious hope, the sector is positioning itself for a potential rebound—if it can weather the ongoing global headwinds.