US tariff deal good news for car industry

Britain’s trade deal with the USA has been hailed as good news for the automotive sector supply chain in Lancashire.

However, there are calls for the UK government to keep working to deliver a wider reaching agreement with US President Donald Trump.

Under the deal that has been struck the US has agreed to reduce tariffs on British exports of automobiles, steel and aluminium.

However, the baseline 10 per cent on most British goods will remain in place and the UK has committed to enhancing market access for American products including beef, ethanol, chemicals and machinery.

The US will also have preferential access to high-quality UK aerospace components.

The deal brings welcome relief for the UK automotive industry, which had faced a 27.5 per cent tariff on exports across the Atlantic. Major manufacturer Jaguar Land Rover, which has a manufacturing plant on Merseyside, temporarily halted US shipments.

Under the new framework UK vehicle exports will benefit from an annual quota allowing 100,000 units at a reduced 10 per cent tariff.

Paul Jones, chief executive of Northern Automotive Alliance, based at AMRC North West at Samlesbury Enterprise Zone, says that is good news for the industry and the supply chain in the county.

He said: “The US is our second largest export market so it’s really important that we've got an agreement to reduce tariffs. It is going to save hundreds of millions of pounds a year for the industry.

“This applies to a quota of 100,000 UK cars, which is roughly the total we exported last year to the US.

“The sector employs 180,000 people directly in manufacturing and roughly 780,000 across the wider automotive sector.

“It's Britain's biggest export sector and it's about 10 per cent of all our exports by value.

“It’s really significant news for us and it impacts Lancashire and the North West as people and businesses are involved in that supply chain.”

Miranda Barker, chief executive of East Lancashire Chamber of Commerce, said: “It is vital that the UK government keeps working to ensure a viable long term and wide-reaching trade agreement is struck with the US.

“Going beyond the scope of this deal and encompassing all of our manufacturing and exporting businesses and enabling tariff free transactions to resume for the good of the firms and jobs on both sides of the Atlantic.”

Shevaun Haviland, director general of the British Chamber of Commerce, said: “The news on aerospace, including jet engines is also good news, as is additional protection from tariffs on our pharmaceutical sector. 

“But this must not be the end of the process; we must continue to push the argument for free and fair trade across all economic sectors and that tariffs are a lose-lose position.” 

Ginni Cooper, Preston-based manufacturing partner at accountancy and business advisory firm MHA, said: “The removal of tariffs from steel and aluminium is excellent news for manufacturers and gives a greater amount of certainty to the sector.

“Given that the government estimates around five per cent of UK steel exports and six per cent of aluminium exports by volume go to the US, this deal secures supply chains and exports into the US. It also avoids the market being flooded with cheap steel.

“However, the 10 per cent tariffs will continue to be applied to other goods. Also, as ever, the devil is in the detail, and several questions still remain around whether this deal will be ratified and changed. And most importantly, whether it will potentially have a detrimental effect on the UK’s trade deal with Europe.”

Tom Bradshaw, NFU president, said the farming industry had concerns. The deal means there will be “reciprocal market access” on beef which means that UK farmers will be given a quota for 13,000 metric tonnes of beef to be exported to the US, and the US granted the same.

He said: “For several years, we’ve campaigned with the UK’s agricultural attachés in Washington for market access for British beef, a product globally respected for its quality and strong environmental credentials.

“These efforts have contributed to enabling the UK government to secure ring-fenced access for British beef exports to the US.

“However, the inclusion of a significant volume of bioethanol in the deal raises concerns for British arable farmers. We are working through what this means for the viability of the domestic bioethanol production and therefore the potential impact on our members.

“Our biggest concern is that two agricultural sectors have been singled out to shoulder the heavy burden of the removal of tariffs for other industries in the economy. While we understand this, we also know that today is the start, not the end, of a process and UK agriculture cannot continue to shoulder such imbalances in future negotiations.”