In brief
The Society of Motor Manufacturers and Traders (SMMT) warned that the European Union’s “Made in EU” proposals and stricter rules of origin could restrict UK-automobiles from the EU market and impose substantial tariffs, potentially undermining the UK’s projected vehicle production recovery. Forecasts suggest a drop in 2026 but a rise to 752,000 units in 2027, largely driven by electric vehicles, while the UK’s major export markets are the EU, which accounts for more than half of its automotive exports. The SMMT calls the upcoming EU‑UK Summit a vital opportunity to negotiate safeguards for the 80‑billion‑euro trade relationship.
On October 29, 2026, the Society of Motor Manufacturers and Traders (SMMT) issued a warning that upcoming European Union (EU) trade measures could block the projected recovery of British vehicle production. The warning was published by Xinhua and highlights the potential impact of the EU’s “Made in EU” proposals and stricter rules of origin.
EU ‘Made in EU’ proposals could exclude UK-built vehicles
Xinhua reports that the EU Commission’s “Made in EU” proposals, if applied in their current form, would effectively bar cars built in the United Kingdom from being sold in the EU market. The proposals are designed to protect goods that bear the “Made in EU” label, but the SMMT argues that UK-made vehicles would fall outside that definition and be excluded from the EU’s largest automotive export market.
Stricter rules of origin could add tariffs as high as 1.4 bn pounds
The SMMT warns that the rules of origin, set to take effect in 2027 under the Trade Cooperation Agreement, would impose tariffs amounting to 1.4 bn pounds (around 1.9 bn U.S. dollars) annually on two‑way electric vehicle trade. This figure reflects a significant tariff cost that the UK automotive industry would face, according to the society’s analysis.
The outlook used by the SMMT forecasts that British vehicle production will see a decline this year, before rising to 752,000 units in 2027. The increase is attributed mainly to the launch of new models, with electric vehicles (EVs) dominating the expected rebound.
Export data from September underline the stakes: more than three‑quarters of UK vehicle production was destined for export, with the EU accounting for 57.5 percent of those exports. The reliance on EU buyers places the industry in a precarious position should the EU measures come into force as described by the SMMT.
Both sides of the channel, the society says, would suffer damages. The SMMT stresses that the forthcoming EU‑UK Summit represents “a vital opportunity to agree pragmatic solutions and safeguard an 80‑billion‑euro (about 90 billion dollars) trading relationship.” The emphasis on the summit reflects the urgency of finding a compromise that protects mutual interests.
Internal pressures are also cited by the SMMT. The society warns that unrealistic domestic EV sales targets are putting manufacturers under acute pressure, eroding profitability, diverting resources, and undermining the UK’s attractiveness as an investment destination.
While the SMMT focuses on protecting the automotive industry on both sides of the channel, it also underscores that EU measures could have an outsized impact on the manufacturing supply chain, especially for components that travel across borders under the newly tightened rules of origin.
In summary, the SMMT’s warning, as reported by Xinhua, highlights a looming clash between EU trade policy and the UK automotive sector’s recovery plans. The society’s remarks call for urgent negotiation at the EU‑UK Summit, stressing the importance of safeguarding a trans‑channel trade relationship that has valued in the 80‑billion‑euro range.
