The extent of the harm inflicted on UK car exporters from US tariffs has been revealed, with shipments plunging by more than half last month according to industry figures.

The Society of Motor Manufacturers and Traders (SMMT) said the number of UK-made cars heading across the Atlantic fell 55.4% during May following a decline of just under 3% the previous month.

The dramatic slowdown marked a reaction to the 25% tariffs imposed on imports by the Trump administration from 3 April amid the president’s “liberation day” trade war escalation which sparked chaos in global supply chains.

The move prompted Jaguar Land Rover – the biggest exporter of cars to the US from these shores – to suspend all shipments temporarily.

The US is the most important market for UK producers, in value terms, and was worth £9bn last year with the vast majority of those sales coming from luxury brands also including Bentley, Rolls-Royce Motor Cars and Aston Martin.

Tariffs on UK-made cars imported into the US have since been reduced from 25% to 10% for up to 100,000 vehicles on an annual basis.

That was signed off by the president 10 days ago.

While it spares UK producers from the worst, the US trade war does not represent the only challenge.

The industry has been crying out for help to bolster its competitiveness and increase demand for new electric vehicles amid lacklustre interest, not just at home, but abroad too.

It has welcomed promised help with punitive energy costs through the government’s industrial strategy.

Wider SMMT figures showed car and commercial vehicle production fell for the fifth consecutive month in May.

It reported a 33% decline to just 49,810 vehicles and said it was the worst performance for May, when the COVID years were excluded, since 1949.

The industry body blamed continuing model changeovers, along with the impact of US tariffs.

The number of vehicles produced for the domestic market fell while shipments to the EU, which generally accounts for the biggest share of volumes, was down by 22.5%.

Read more:
Industrial strategy targets short-term pain for long-term gain

Mike Hawes, the SMMT’s chief executive, said: “While 2025 has proved to be an incredibly challenging year for UK automotive production, there is the beginning of some optimism for the future.

“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 recognise the critical role the sector plays in driving economic growth, should help recovery.

“With rapid implementation, particularly on the energy costs constraining our competitiveness, the UK can deliver the jobs, growth and decarbonisation that is desperately needed.”

Despite “extensive” negotiations with the government, the UK’s largest bioethanol plant is to close due to the UK-US trade agreement, according to the firm that owns it.

Consultations have begun with the more than 160 employees at Vivergo’s Hull site, with all manufacturing to cease before 13 September if no funding is agreed with government, the business said.

Money blog: Top chef on overrated trend he doesn’t get

The wind-down of the factory is attributed to the recent agreement between the US and UK, which allowed for tariff-free US ethanol to enter the UK.

The agreement “undermined” the commercial viability of Vivergo, Primark’s parent company Associated British Foods (ABF) said regarding its bioethanol business.

“The situation has been made significantly worse by the UK’s trade deal with the US”, it said.

Unless the UK funds the company’s short-term losses and comes up with a longer-term solution, Vivergo will shut after the staff consultation and its contractual obligations are met.

‘Uncertain’ talks

The government committed to formal negotiations on a sustainable solution, ABF said in a regulatory update, but the outcome is uncertain.

As a result of that uncertainty, consulting staff on “an orderly wind down” is taking place at the same time.

“Extensive” discussions had already been under way with government in an effort to find a “financial and regulatory solution” so Vivergo can operate on a “profitable and sustainable basis”.

Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

It had set a deadline of Wednesday for that solution to be delivered, the update said.

Bioethanol is a renewable fuel made from plants. Vivergo manufactures the fuel from wheat.

In return for the UK agreeing to allow American ethanol to enter tariff-free, the US said it would reduce tariffs on imports of UK cars and steel.

In response to the news, a government spokesperson said: “We recognise this is a concerning time for workers and their families and it is disappointing to see this announcement after we entered into negotiations with the company on financial support yesterday.

“We will continue to take proactive steps to address the long-standing challenges the company faces and remain committed to working closely with them throughout this period to present a plan for a way forward that protects supply chains, jobs and livelihoods.”

The government is snubbing a £25bn renewable energy project which promised to import enough solar and wind power from Morocco to meet nearly a tenth of the UK’s electricity demand.

Sky News has learnt that Ed Miliband, the energy security and net zero secretary, has decided not to proceed to formal negotiations with Xlinks, a privately owned company, about a 25-year price guarantee agreement.

A ministerial statement is expected to be made confirming the decision later on Thursday.

Money blog: Top chef on overrated trend he doesn’t get

The government’s move to snub Xlinks after protracted talks with the company will come as a surprise to energy industry executives given the company’s pledge to deliver large quantities of power at a price roughly half of that to be generated by new nuclear power stations.

Xlinks, which is chaired by the former Tesco chief executive Sir Dave Lewis, had been seeking to agree a 25-year contract for difference with the Department for Energy Security and Net Zero (DESNZ), which would have guaranteed a price for the power generated by the project.

One Whitehall insider said its decision was partly motivated by a desire to focus on “homegrown” energy supplies – an assertion queried by industry sources.

Sir Dave told The Sunday Telegraph earlier this year that Xlinks would switch its focus to another country if the UK government did not agree to support the project.

The company is now expected to explore other commercial opportunities.

Xlinks had not been seeking taxpayer funding for it, and claimed it could help solve the “intermittency problem” of variable supply to UK households and businesses.

Reducing manufacturers’ energy costs was the centrepiece of the government’s industrial strategy launched earlier this week.

Sources said that market-testing of the financing for Xlinks’ construction of a 4,000-kilometre cable between Morocco and the Devon coast had been significantly oversubscribed.

Xlinks’ investors include Total, the French energy giant, with the company having raised about £100m in development funding so far.

The company has said it would be able to deliver energy at £70-£80-per-megawatt hour, significantly lower than that of new nuclear power stations such as the one at Sizewell C in Suffolk to which the government allocated more than £14bn of taxpayers’ money earlier this month.

It was unclear whether the growing risk of undersea cable sabotage was one of the factors behind the government’s decision not to engage further with Xlinks.

In an interview with Sky News in 2022, Sir Dave said Xlinks enjoyed low geopolitical risk because of Britain’s centuries-old trading relationship with Morocco and the north African country’s ambitions of growing the energy sector as a share of its exports.

“The Moroccan government has recognised that exporting green [energy] is a very important part of their economic plan going forward, so they have an export strategy,” he said at the time.

“The Sahara desert is probably one of the best places in the world to generate renewable energy from… so you have a very long period of generation.

“And if you’re capturing that energy and adding some battery storage, you can generate energy to cover a little bit more than 20 hours a day, which makes it a fantastic partner for the UK.”

The former Tesco chief added the quality of modern high-voltage cables meant energy could now be transported “over very long distances with very, very few losses”.

Sir Dave said the technology risks associated with the project were relatively small, citing examples of much longer cable links being planned elsewhere in the world.

“The benefit here is that it’s proven technology with a very committed reliable partner with a cost profile… that we will never [be able to] match in the UK,” he said.

A spokesperson for DESNZ said it did not comment on speculation, while Xlinks declined to comment on Thursday.