Brand new luxury British and European cars are entering Russia despite being banned – here’s how
The Caucasus Mountain range in Georgia is one of the great sights in the south of Europe. Towering peaks, higher than any in the Alps, rise up from green meadows and grassy hills covered in wildflowers. Winding roads thread through deep valleys, overlooked by ornate Orthodox churches and monasteries.
But when I visited recently, I found a sight of an unexpected kind. The roads here have become dominated by a very particular kind of traffic: enormous convoys of trucks, carrying all manner of goods towards Georgia’s northerly neighbour: Russia. When I travelled north towards the checkpoint of Lars – the only road into Russia – I encountered a long queue of trucks waiting to clear customs and pass across.
I had come here in search of an answer to a puzzle that’s been preoccupying me for some time. It began with a chart. This chart showed that after Russia invaded Ukraine and sanctions were imposed by G7 nations, including the UK, the flows of certain goods to that country suddenly cratered, falling to zero. That went for the so-called “dual use goods” you could use to create a makeshift weapon or put into a drone, but also for the luxury goods banned from sale into Russia.
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The theory back then was that by starving Russia’s war machine of the parts it needed and by starving senior Russian businesspeople and officials of the Western luxuries they coveted, European states could cause economic damage even if they weren’t directly at war with Vladimir Putin’s state.
But the data told a subtly different story. While exports of those goods to Russia certainly fell to zero, they suddenly rose sharply to a host of Russia’s neighbours. All of a sudden, Britain was sending drone equipment to Kyrgyzstan; all of a sudden, we were exporting luxury cars to Azerbaijan, in numbers we had never come anywhere close to before. Things got odder when you looked at Azerbaijan’s own export data, which showed a sudden spurt in its own luxury car exports (it does not manufacture luxury cars), to other countries in the Caucasus and Central Asia, including Georgia and Kazakhstan.
This posed a bit of a mystery. While sanctions experts said they suspected these Caucasus states were almost certainly being used as a kind of conduit, to send sanctioned goods to Russia, the data trail went cold when those cars entered the Caucasus. When we first raised this earlier in the year, Britain’s motor lobby group, the Society of Motor Manufacturers and Traders (SMMT), said: “UK vehicle exports to Azerbaijan – as to many countries globally – have increased due to a number of factors, not least a flourishing economy, new model launches and pent-up demand.”
The implication, in other words, was that most if not all the cars stayed in the Caucasus (which would be entirely legal) instead of crossing into Russia (which would not).
A Porsche seen by Sky News near the border
Like the driveway of a Mayfair hotel
All of which is how I found myself in the Caucasus mountains recently to see for myself whether this story really stacked up. We had gone there following a tip-off. A colleague in Georgia had sent us a photo from the border checkpoint, where a set of informal car parks was filled with the kind of concentration of luxury cars you would normally only expect to see outside a Mayfair hotel, or in a country like Dubai. There were Mercedes, high-end Lexus, BMWs and, there among a large number of German cars, two Range Rovers.
So we travelled out to Georgia to find out whether there were really UK-made cars still travelling into Russia. Now in some respects, our focus on cars might seem odd: after all, there are far more egregious breaches of the sanctions regime. Our previous investigation found radar parts and electrical equipment have also been sent from the UK to the Caucasus and Central Asia following the imposition of sanctions.
A Lamborghini and two Mercedes G-wagons
But the reason we were focused on cars is that while there’s no way of telling from the outside what’s inside a cargo truck or a shipping container, vehicles are far harder to move secretly. In short, if we could show that European, and for that matter British cars were being moved into Russia, then it would demonstrate visually, for the first time, how these sanctions are being broken.
We spent two days close to the border, watching the process as cars and other trucks were brought there, and then sent over into Russia. We spoke to numerous men engaged in the trade. What we discovered was a complex but finely-honed system designed to transport European cars into Russia.
A Mercedes seen by Sky News
‘This car will go to Russia and will remain there’
One group of men is charged with bringing the cars to the border – sometimes from showrooms in the capital, Tbilisi, sometimes from the Black Sea ports of Poti or Batumi. Mostly they don’t know where the cars come from beforehand – whether directly from countries like the UK or via other Caucasus states like Azerbaijan.
Once they bring the cars to the border, they leave them there in a set of car parks where they sit for a few days until the necessary paperwork is completed. That paperwork is not without its own complications: after European states imposed sanctions, Georgia introduced its own bans on sending cars into Russia. However, there are numerous loopholes that enable you to bring the cars across nonetheless.
A Porsche waits at the car park
One way is to have the cars registered and custom cleared in Armenia before they come up north to the Lars checkpoint in Russia. Sometimes those taking the cars into Russia are advised to say they are only being driven through Russia to Kyrgyzstan but, as one Russian YouTuber puts it: “Let’s be honest: everyone understands everything perfectly well – everyone from the people who will register you at the traffic police and the people at the Georgian border – that this car will go to Russia and will remain there.”
Either way, eventually these cars are issued with transit registration plates, after which they can be driven over the border. And since Georgians can travel visa-free into Russia, and vice versa, taking the cars across the border is simply a question of driving them there, leaving the car on the other side where it will be collected by another group of men, and then hitching a ride back into Georgia.
Checkpoint at the Georgia-Russia border
Everyone wins – except the Ukrainians
We saw numerous cars being taken across the border in this way, and here’s the key thing about this system: first, no single person in the chain can easily be fingered for any crime – even though, when you put it all together, it certainly amounts to a contravention of sanctions law. Second, and just as importantly for our purposes, it means that the cars don’t show up in the customs data. From the point of view of a statistician, they simply arrive in Azerbaijan or Georgia and then they disappear.
This, we learnt, was only one of numerous routes sanctioned goods are taking into Russia, but such routes are, all told, a large part of the explanation for how Mr Putin is able to keep his regime equipped with the components it needs to wage war, and the luxuries needed to reward his cronies. The upshot is contrary to the promises when these sanctions were imposed: Russia’s economy remains strong, there are no shortages of essential and non-essential goods in Moscow and, along the way, Caucasus states like Georgia and Azerbaijan have seen an enormous economic boost from serving as an informal trade conduit. Everyone wins – except the Ukrainians.
Traffic waiting to cross from Georgia into Russia
But while we saw this process carried out at the border for many German cars – Mercedes and Porsches were the most prevalent brands – we didn’t find the Range Rovers our contact had photographed a few days earlier. They were, presumably, already over the border.
So after a few days we headed south towards Tbilisi to talk to more people in the export trade. But just outside the Georgian capital, we suddenly spotted a convoy of trucks heading in the opposite direction. Among those trucks were two car carriers with what looked like brand new Range Rovers. We turned the car around and began to follow them up the mountain, realising that we were witnessing this shadow trade route in person.
Up until then there had been no clear filmed evidence that British cars are actually leaving the Caucasus for Russia. So we followed the car carriers as they travelled slowly up the mountain roads towards the border.
When we arrived at the border, the atmosphere in the car park had transformed. What had been a quiet place during the day was a hive of activity. Clearly this was peak time – it seemed that most of the car deliveries happened in the dead of night. Not only were there two Range Rovers, there were countless other luxury cars, including top of the range Mercedes G-Wagons and a Lamborghini Urus.
When day broke the next morning, we checked the VIN numbers on the Range Rovers – the numerical fingerprint displayed on the windscreen, allowing you to trace these vehicles. They showed that these cars were brand new, made in Solihull in 2024. A document visible on the windscreen of one of them showed the date of April 2024.
Boxes inside one of the cars
No one is trying to hide what’s happening
Those dates were significant: we at Sky News had warned CAT logistics groups about the existence of this trade in March 2024. Jaguar Land Rover (JLR) and the SMMT had been aware of the risks posed by these vehicles ending up in the Caucasus before these cars had been manufactured. Yet here they still were, en route to Russia, joining the line to cross over the border.
A spokesperson for JLR said: “JLR stopped sales of vehicles to Russia and Belarus in February 2022. Sanctions compliance is a corporate priority, as well as an obligation for our third-party retail network.
“An ongoing investigation into these vehicles has confirmed they were not supplied by JLR to the Georgia market. They were supplied by JLR to retailers in countries that do not share a border with Russia and then in turn sold to customers in those countries, which are subject to similar sanctions and export controls as we are in the UK in relation to Russia.
Makeshift car park full of luxury cars, including Range Rovers, near the border
“JLR, along with its retailer network, continues to adapt its compliance strategies to counter the efforts of third parties seeking to circumvent sanctions against Russia and Belarus.”
However, while UK carmakers and authorities insist they are doing everything they can to clamp down on these unofficial trade routes, perhaps the most startling takeaway from our investigation is that there on the ground in Georgia, no one is trying to hide what’s happening. Everyone knows these high-end European cars aren’t supposed to be going into Russia, yet they are passing over the border one by one, every day. Everyone knows what’s happening, but no one is doing anything to stop it.
And one has to presume much the same thing is happening with all types of goods, including those inside the bowels of the trucks lined up at the border. The passage of these cars is only the most visible evidence that the sanctions regime is not preventing expensive, important items travelling from Europe into Russia. For the time being, policymakers and businesses seem powerless or unwilling to prevent this murky trade.
“Liberation day” was due to be on 1 April. But Donald Trump decided to shift it by a day because he didn’t want anyone to think it was an April fool.
It is no joke for him and it is no joke for governments globally as they brace for his tariff announcements.
It is stunning how little we know about the plans to be announced in the Rose Garden of the White House later today.
It was telling that we didn’t see the President at all on Tuesday. He and all his advisers were huddled in the West Wing, away from the cameras, finalising the tariff plans.
Follow the events of Liberation Day live as they unfold
Three key figures are central to it all.
Treasury Secretary Scott Bessent is the so-called ‘measured voice’. A former hedge fund manager, he has argued for targeted not blanket tariffs.
Peter Navarro is Trump’s senior counsellor for trade and manufacturing. A long-time aide and confidante of the president, he is a true loyalist and a firm believer in the merits of tariffs.
His economic views are well beyond mainstream economic thought – precisely why he appeals to Trump.
The third key character is Howard Lutnick, the commerce secretary and the biggest proponent of the full-throttle liberation day tariff juggernaut.
The businessman, philanthropist, Trump fundraiser and billionaire (net worth ranging between $1bn and $2bn) has been among the closest to Trump over the past 73 days of this presidency – frequently in and out of the West Wing.
If anything goes wrong, observers here in Washington suspect Trump will make Lutnick the fall guy.
What are Donald Trump’s tariffs, what is ‘liberation day’ and how does it all affect the UK?
And what if it does all go wrong? What if Trump is actually the April fool?
“It’s going to work…” his press secretary said when asked if it could all be a disaster, driving up the cost of living for Americans and creating global economic chaos.
“The president has a brilliant team who have been studying these issues for decades and we are focussed on restoring the global age of America…” Karoline Leavitt said.
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‘Days of US being ripped off are over’
Dancing to the president’s tune
My sense is that we should see “liberation day” not as the moment it’s all over in terms of negotiations for countries globally as they try to carve out deals with the White House. Rather it should be seen as the start.
Trump, as always, wants to be seen as the one calling the shots, taking control, seizing the limelight. He wants the world to dance to his tune. Today is his moment.
But beyond today, alongside the inevitable tit-for-tat retaliation, expect to see efforts by nations to seek carve-outs and to throw bones to Trump; to identify areas where trade policies can be tweaked to placate the president.
Even small offerings which change little in a material sense could give Trump the chance to spin and present himself as the winning deal maker he craves to be.
One significant challenge for foreign governments and their diplomats in Washington has been engaging the president himself with proposals he might like.
Negotiations take place with a White House team who are themselves unsure where the president will ultimately land. It’s resulted in unsatisfactory speculative negotiations.
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Treasury minister: ‘We’ll do everything to secure a deal’
Too much faith placed in the ‘special relationship’?
The UK believes it’s in a better position than most other countries globally. It sits outside the EU giving it autonomy in its trade policy, its deficit with the US is small, and Trump loves Britain.
It’s true too that the UK government has managed to accelerate trade conversations with the White House on a tariff-free trade partnership. Trump’s threats have forced conversations that would normally sit in the long grass for months.
Yet, for now, the conversations have yielded nothing firm. That’s a worry for sure. Did Keir Starmer have too much faith in the ‘special relationship’?
Downing Street will have identified areas where they can tweak trade policy to placate Trump. Cars maybe? Currently US cars into the UK carry a 10% tariff. Digital services perhaps?
US food? Unlikely – there are non-tariff barriers on US food because the consensus seems to be that chlorinated chicken and the like isn’t something UK consumers want.
Easier access to UK financial services maybe? More visas for Americans?
For now though, everyone is waiting to see what Trump does before they either retaliate or relent and lower their own market barriers.
Business
What are Donald Trump’s tariffs, what is ‘liberation day’ and how does it all affect the UK?
If there is a word that has dominated Donald Trump’s second term, it’s tariffs.
Aluminium, steel, cars and champagne have all been in his firing line, while China, Canada and Mexico are the countries targeted with the heaviest costs.
Along the way, there have been threats, pauses and postponements.
So what are tariffs, what is in the pipeline – and what could all this mean for the UK?
What are tariffs and why is Trump threatening to use them?
Tariffs are taxes on goods imported into the US.
It is the importers buying the goods who pay the tariffs – therefore, American companies.
Ultimately, the intent is to protect US manufacturing and bolster jobs by making foreign-made products less attractive.
However, there is a knock-on effect: to compensate for tariffs, companies put up their prices, so customers end up paying more for goods.
Tariffs can also damage foreign countries as they make their products pricier and harder to sell.
In his second term, Mr Trump has frequently used them – or the threat of them – as a trade weapon.
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Trump’s tariffs: What can we expect?
They are a key part of Mr Trump’s efforts to reshape global trade relations, and he plans to impose a swathe of what he calls “reciprocal” taxes that would match tariffs levied by other nations.
Tariffs were also part of his playbook in his first term, when he imposed taxes on most goods coming from China and used them as a bargaining chip to force Canada and Mexico to renegotiate a North American trade pact.
On his first day back in office, the US president promised 25% tariffs on all products coming into the US from its nearest neighbours Mexico and Canada – ostensibly to force the countries to tackle illegal migration and fentanyl crossing the border.
What is liberation day?
Mr Trump has branded 2 April “liberation day”, when he could unveil the reciprocal tariffs on countries deemed to be giving the US a bad deal on trade.
The extent of potential tariffs and countries affected remains unclear, with Mr Trump at times sending mixed messages.
On 30 March, he said “all countries” could expect to be hit by tariffs.
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What is Trump’s ‘Liberation Day’?
Speaking from Air Force One, the US president rubbished a question from a reporter who asked whether it was true he was planning on targeting between 10 and 15 countries.
“Who told you 10-15 countries? You didn’t hear it from me,” he said.
When pressed on how many he was planning to hit, he said: “You’d start with all countries, let’s see what happens.”
Two days prior, he said he was open to carving out deals with countries seeking to avoid US tariffs, but that those agreements would be negotiated after 2 April.
He had previously said he “may give a lot of countries breaks, but it’s reciprocal”, adding: “We might be even nicer than that.”
How could the UK be affected?
The UK hopes an economic deal with the US will spare the country from some of the tariffs.
Sir Keir Starmer and Mr Trump have had “productive negotiations” towards a UK-US “economic prosperity deal”, Downing Street has said.
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‘Everything on table over US tariffs’
The two leaders discussed a possible deal in a phone call on Sunday and agreed negotiations will “continue at pace”, according to a statement released on Sunday 30 March.
The day before the so-called “liberation day”, Sir Keir told Sky News political editor Beth Rigby the UK was “working hard on an economic deal” with the US and said “rapid progress” has been made.
But, he admitted: “Look, the likelihood is there will be tariffs. Nobody welcomes that, nobody wants a trade war.
“But I have to act in the national interest and that means all options have to remain on the table.”
Sir Keir added: “We are discussing economic deals. We’re well advanced.
“These would normally take months or years, and in a matter of weeks, we’ve got well advanced in those discussions, so I think that a calm approach, a collected approach, not a knee-jerk approach, is what’s needed in the best interests of our country.”
Mr Trump has not explicitly said the UK is in his sights for further tariffs, though he has described VAT – a tax added on all goods and services in the UK – as unfair.
In deciding what is a reciprocal tariff for the UK, it’s possible Mr Trump could use the tax, typically 20%, to decide.
Data shows no great trade imbalances – the gap between what you import and export from a certain country – and UK figures show no trade deficit with the United States.
UK ministers have previously suggested this could be good news for avoiding new levies.
But the tariffs Mr Trump has already announced would have a big impact on the UK – particularly the car tariff.
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Business secretary hopes Trump tariffs will be ‘reversed in weeks or months’
Jonathan Reynolds, the business and trade secretary, told Sky News he is “hopeful” the tariffs can be reversed soon.
He warned: “The longer we don’t have a potential resolution, the more we will have to consider our own position in relation to [tariffs], precluding retaliatory tariffs.”
He added the government was taking a “calm-headed” approach in the hope a deal can be agreed, but said it is only “reasonable” that retaliatory tariffs are an option, echoing Sir Keir’s sentiments over the weekend.
What tariffs have already been announced?
Some tariffs have already come into effect, while Mr Trump has confirmed some that will come in on 2 April.
He has said a 25% tariff on all cars imported to the US will come into effect, with a similar tariff on car parts expected to follow in May.
This could prove even more complicated for American car makers, who source components from around the world even if the vehicle is made in the US.
But Mr Trump has insisted the move will “continue to spur growth”, pointing to plans from Hyundai – the South Korean car maker – to build a $5.8bn (£4.5bn) steel plant in Louisiana.
The tariff could have a huge impact on the UK’s car industry, including on manufacturers such as Jaguar Land Rover, Aston Martin and Rolls-Royce.
Official data shows the US is the UK car sector’s largest single market by country, accounting for £6.4bn worth of car exports in 2023 – 18.4% of the total.
Trump has also said he will place a 25% tariff on all imports from any country that buys oil or gas from Venezuela, which includes the US itself – in addition to imposing new tariffs on the South American country.
On 12 March, a 25% tariff on all steel and aluminium imports to the US came into effect, affecting UK products worth hundreds of millions of pounds.
The move came after he placed a 10% tax on all imports from China, which he later doubled to 20%.
He placed 25% tariffs on Mexico and Canada, but paused them for a month two days after they came into effect, meaning they are set to resume on 2 April.
The pause did not fully cover a tariff of 10% on Canadian energy products.
What has been the global response to tariffs?
There has widely been condemnation of the tariffs, especially from countries worst affected like Mexico and Canada.
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Canadian PM: ‘Tariffs are an attack’
Some have imposed, or threatened to impose, retaliatory tariffs.
China has already hit back with retaliatory tariffs covering a range of US goods, including a 15% tariff on coal and liquefied natural gas products, a 10% tariff on US crude oil and tariffs of up to 15% on key US farm exports.
Canada imposed tariffs of its own on US products, including a 25% reciprocal tariff on US steel and aluminium products and tariffs worth an estimated C$29.8bn (£16bn) on a wide range of US products including orange juice, peanut butter, alcohol, coffee and clothing.
Read more on tariffs:
It may be harder for the UK to trump metals tariffs
Stock markets tumble as Trump tariffs loom
The European Union has said it will impose retaliatory tariffs on the US, but when they will come into force is unknown.
The European Commission initially threatened to impose “countermeasures” affecting €26bn (£21.9bn) of US goods from 1 April, but later delayed this until the middle of April.
The bloc said the delay was because it wanted “additional time for discussions” with the US after Mr Trump threatened a 200% tariff on EU alcohol – including wine and champagne – if the bloc imposed duties on US whiskey.
Any tariffs imposed by the bloc would not only impact US steel and aluminium products, but also textiles, home appliances, agricultural goods and whiskey.
Why tariffs could cost you – even if Trump spares UK
Even if no tariffs are put on all UK exports to the US, consumers globally will still be impacted by the wider trade war, particularly in the US.
Economists believe that tariffs will raise costs in the US, sparking a wave of inflation that will keep interest rates higher for longer. The US central bank, the Federal Reserve, is mandated to act to bring inflation down.
More expensive borrowing and costlier goods and services could bring about an economic downturn in the US and have knock-on effects in the UK.
Forecasts from the National Institute of Economic and Social Research (NIESR) predict lower UK economic growth due to higher global interest rates.
It estimated that UK GDP (a measure of everything produced in the economy) could be between 2.5% and 3% lower over five years and 0.7% lower this year.
The Centre for Inclusive Trade Policy thinktank said a 20% across-the-board tariff, impacting the UK, could lead to a £22bn reduction in the UK’s US exports, with the hardest-hit sectors including fishing and mining.
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