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Rolls-Royce and Aston Martin shares surged on Thursday after the trade deal between Donald Trump and Sir Keir Starmer gave them easier access to US markets.
Rolls, a major manufacturer of jet engines, was one of the biggest risers on the FTSE 100 share index after Howard Lutnick, the US commerce secretary, said the aerospace company’s engines and plane parts would not be subject to tariffs.
Shares rose 4.5pc to 783.46p to close the session above the level they traded at before Mr Trump’s wave of tariffs on April 2.
Luxury carmaker Aston Martin, which gets more than one third of its revenue from America, soared 14pc. A week ago, it had warned investors that it was limiting exports to the US as a result of Mr Trump’s trade war.
British engineering firms, including Melrose, IMI and Weir, also jumped following the trade deal as well as a briefing that the UK and US would work towards a technology partnership on aerospace.
The trade deal, sealed with a phone call between the US president and the Prime Minister, will set a 10pc tariff on the first 100,000 British-made cars exported to the US each year. This is down from the 27.5pc tariff rate previously in place.
It is also poised to benefit Rolls-Royce Motors – the carmaker that is owned by BMW, and no longer linked to Rolls-Royce the aerospace company – along with Jaguar Land Rover and Bentley.
Mike Hawes, the head of Britain’s Society of Motor Manufacturers and Traders (SMMT), said: “The application of these tariffs was a severe and immediate threat to UK automotive exporters, so this deal will provide much-needed relief, allowing both the industry, and those that work in it, to approach the future more positively.”
However, Rella Suskin, an automotive analyst at Morningstar, said the deal would still hinder the British car industry.
“The limitation [of] 100,000 cars annually to the US at a 10pc tariff means that Jaguar is unable to take any market share from a ‘preferential’ tariff relative to European automakers,” she said. “Jaguar Land Rover sold just over 106,000 vehicles in the US in 2024.”
She said the deal would “maintain their status quo”, while BMW, which manufactures in the US, would be able to grow.
In the Oval Office, Mr Lutnick singled out British-made Rolls-Royce engines as a major beneficiary. “We’ve agreed to let Rolls-Royce engines and those kind of plane parts come over tariff free,” he said.
The move follows a similar Chinese decision to exempt US-built aircraft engines from its tariffs, with the home-grown Comac C919 reliant on turbines from General Electric.