Why this German automaker will benefit from the UK-US trade deal
British businesses are still hashing out exactly what the recently-unveiled U.K.-U.S. trade deal — the first under President Donald Trump’s tariff-first , negotiate-later regime — means for them. The European Union is yet to strike its own deal. Despite this, one automaker from the bloc’s biggest economy is about to see benefits due to its U.K. presence. BMW , a pillar of Germany’s beleaguered automotive industry , is a major exporter to the U.S. from the U.K. Automotive companies around the world have been hit hard by Trump’s policy, which slapped a blanket 25% rate on imported vehicles and car parts, on top of an existing 2.5% base tariff. As part of the U.K.-U.S. deal, that rate will be adjusted to 10% on the first 100,000 vehicles imported from U.K. car manufacturers in a year — though additional vehicles will still face the higher 27.5% rate. Rico Luman, senior sector economist at Dutch bank ING, told CNBC the news would be a “relief” for the major car makers manufacturing in the U.K. for the U.S. export market, which also includes Tata Motors -owned Jaguar Land Rover, Japan’s Nissan , and luxury brands Aston Martin and Bentley. However, he added that the 10% tariff rate would only apply to around 83% of current annual export volumes to the U.S. “This curbs the upside for U.K. car industry exports to the U.S. and also means the U.K. can’t be a connecting country for shifting current EU-production to the U.S. for exports to the U.S.,” he said. “The EU is expected to negotiate a trade deal with the U.S. as well before early July. If it fails to include a similar arrangement for its car industry, it will at least improve the competitive position of the current installed base in the U.K.” ‘Notable beneficiary’ Pal Skirta, equities analyst at Germany’s Metzler, nonetheless named BMW Group — which spans the BMW, MINI and Rolls-Royce car brands — as a “notable beneficiary” from the U.K.-U.S. trade arrangement, as tariff concessions are expected to support margin dynamics across its U.K. operations. In a May 9 note, Skirta pointed to BMW’s production facilities for MINI in Oxford, U.K., which he said produces around 200,000 units annually, with around 26,000-30,000 sold to the U.S. totaling around 10-15% of global MINI sales. The group also has a U.K. plant for Rolls-Royce, and North America was the brand’s largest market in 2024. BMW’s engine plant in Hams Hall near Birmingham, U.K., meanwhile manufactures more than 375,000 engines each year and sends a “meaningful portion” of these to its plant in Spartanburg, South Carolina, for use in BMW X models, Skirta said. BMW previously indicated it will seek to boost output at that plant to combat the impact of tariffs. However, there are still some areas of confusion arising from the deal. While initial read-outs say it secures “preferential access to high-quality U.K. aerospace components,” no mention is made of autos parts. There is also a lack of clarity over when the lower tariff rate will come into effect, and the details of how the 100,000 import cut-off works. BMW told CNBC the U.S.-U.K. deal was a “welcome first step in reducing trade barriers,” but did not comment further on the business impact. Michael Field, chief equity strategist at Morningstar, told CNBC that the extent of the financial benefit to BMW from the U.K.-U.S. trade deal remained difficult to gauge. Volkswagen could also receive some tailwinds due to its sourcing of parts from the U.K. and from smoother ties with the U.S. in the long run. Nevertheless, this is “probably a multi-year story,” Field said. It is also notable that U.K. sales are only between 5% to 7% of total sales for both firms, he added. “So the direct impact of the trade deal won’t move the needle, at least not in the short term.” And as ING analyst Rico Luman observed: “All in all, the agreement still means car makers were better off prior to the Trump-tariffs.”
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