Trade deals, tariffs and Brexit: how will they shape UK prospects?

These significant forces have not yet led to a major change in export markets served by UK vehicle companies, but they could in the future, writes Ian Henry

Until the Brexit vote in 2016, few people in the UK, even within the automotive sector, knew much or even thought about trade deals and tariffs. The Brexit negotiations changed that and the actual and potential costs of leaving a large trading bloc were front and center of the industry’s concerns. The UK-EU Trade and Co-operation Agreement (TCA) is undoubtedly imperfect, but it gave UK automotive manufacturing a better deal than many other sectors, and for the UK vehicle manufacturers, things have continued largely as they did under EU membership.

The TCA allows UK vehicle manufacturers to include EU content as if it were sourced from UK suppliers for the rules of origin provisions of the TCA; this means that provided UK-made vehicles have 55% combined UK and EU content they can be exported to the EU tariff-free. All UK made vehicles meet that stipulation. In the reverse direction almost all EU-made cars also qualify, but isolated exceptions exist. The Ford Fiesta ST, made in Cologne (albeit not for much longer), is subject to import tariffs when it arrives in the UK, because this variant uses an engine and transmission from North America which, along with some other non-EU content, takes this vehicle below the 55% combined UK-EU content level.

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