Car makers risk losing out in “zero tariff” Brexit trade deal

Letter sent to British manufacturers claims they could still face punitive tariffs, even under a “zero tariff” deal, on components sourced from Japan and Turkey

The EU has rejected Britain’s bid to have cars made using parts sourced from Japan and Turkey treated as British in a post-Brexit trade deal, a letter sent to UK car makers from the UK’s chief Brexit negotiator reveals.

This means that even if Boris Johnson renegotiates a deal with the EU, the British car industry could still face a hit as such cars might not be considered British-made and therefore subject to EU tariffs. Crucially, this remains the case even if Johnson strikes a “zero tariff” deal.

In order to qualify as British-made, and be able to be exported to the EU without tariffs, cars made by UK manufacturers will have to have a specified threshold of British parts, expected to be around half.

The terms of an anticipated deal with the EU would allow components sourced from EU countries to count as British. However, this privilege does not extend to non-EU countries such as Japan and Turkey.

According to a draft legal text seen by multiple outlets, the UK has requested that manufacturing of electric cars, batteries, and bicycles be counted as British even if many of the components used to make them are sourced from elsewhere.

But in a letter to the car industry, Britain’s chief negotiator Lord Frost admits that Britain has so far failed to secure the car parts deal it wants, and “obviously cannot insist on it”.

The consequences of this could be severe for UK car makers, particularly those that rely heavily on parts sourced from Japan and Turkey, such as Toyota and Nissan. Autocar has contacted both companies for comment.

*READ MORE*

*EU automotive bodies call for urgent post-Brexit trade deal *

*The car industry now: will Brexit's impact now be even greater? *

*How car firms will alter their prices post-Brexit*