FTSE 100 Holds Steady as UK/US Deal Begins – Automakers Benefit (RR)

The FTSE 100 is holding steady today around 8,800 as a new chapter in U.K.-U.S. trade relations began. The preferential tariff agreement, hammered out in May, officially came into effect today, which offers a significant boost to British automakers exporting to the American market. However there remains lingering uncertainties surrounding steel and aluminum tariffs continue to cast a shadow on the broader economic landscape.

The agreement, the first of its kind negotiated with the U.S. since the introduction of reciprocal tariffs, promises to reshape trade dynamics between the two nations, with immediate implications for key industries and their associated stock valuations.

The headline grabber is undoubtedly the revised tariff structure for automobiles. The agreement stipulates a 10% tariff on the first 100,000 U.K.-manufactured cars exported to the U.S. annually. Anything exceeding that quota will face a 25% import duty. This is a considerable improvement from the previously existing tariffs, which had effectively stalled a significant portion of U.K. car exports to the States.

Data from the Society of Motor Manufacturers and Traders (SMMT) reveals that approximately 102,000 British cars were shipped to the U.S. last year, representing a substantial 27.4% of all U.K. car exports. This makes the U.S. the single largest market for British automobiles globally.

Companies like Jaguar Land Rover (owned by Tata Motors), Aston Martin, and Rolls Royce (hitting further highs again today) are expected to be key beneficiaries of this tariff reduction.

However, not all sectors are celebrating. The fate of U.K. steel and aluminum exports to the U.S. remains a point of contention. While the initial agreement provided some hope for tariff relief, current levies still stand at 25%.

This ongoing uncertainty is a concern for U.K. steel producers, who face a competitive disadvantage in the U.S. market compared to domestic manufacturers.