On 15–16 December 2025, the United Kingdom and the Republic of Korea signed an enhanced free trade agreement (FTA) designed to strengthen economic ties, expand trade, and secure tariff‑free access for a wide range of goods — notably including automobiles and automotive components. The deal modernises the post‑Brexit continuity agreement and comes at a critical time for global trade, offering opportunities and challenges for businesses, workers, and consumers alike.
At its core, the upgraded agreement:
The UK and South Korea will continue tariff‑free access on the vast majority of traded goods — around 98% of tariff lines — protecting about £2 billion of UK exports from tariffs that were at risk of returning once the old deal expired.
A central change relates to the rules of origin — criteria that determine whether a product qualifies for tariff‑free treatment:
This adjustment is designed to recognize today’s complex, global car supply chains, especially for electric vehicles (EVs) where batteries and parts often come from outside both countries.
The deal also expands opportunities for UK firms in:
The UK government projects that the FTA could support an additional £400 million a year in services exports and safeguard tens of thousands of jobs in manufacturing and services.
For the automotive sector, key benefits include:
South Korea is one of the world’s largest economies (12th globally) and a major hub for technology and automotive innovation. The deal deepens ties with a dynamic Indo‑Pacific economy, potentially paving the way for future collaboration and investment.
By reducing trade costs and simplifying customs procedures, the deal helps:
Even with these gains, there are real concerns and limitations for the UK:
Lowering the local content threshold to 25% helps exports qualify for zero tariffs, but it also means that UK‑made cars may include more imported parts.
Good for global competitiveness, but:
South Korea is a major exporter of vehicles into the UK market, especially from brands such as Hyundai and Kia. With tariff‑free access continuing, UK car buyers may find:
This dynamic is a double‑edged sword: while consumers benefit from lower prices and choice, domestic producers may face greater competitive pressures.
Although the deal replaces the old continuity agreement, it must be implemented effectively. Without diagonal cumulation (counting components made in EU countries as local), some SK goods could lose preferential access, and UK exporters could struggle to meet rules of origin if they rely heavily on EU parts.
For drivers, owners, and buyers of cars in the UK, this deal could have several practical implications:
With continued tariff‑free imports from Korea:
South Korea is strong in advanced automotive technologies (e.g., batteries, hybrid systems). UK buyers may benefit from:
If UK carmakers import more components from abroad to meet the new rules of origin, some of the cost changes could:
Overall, users could see competitive pricing and variety, but the long‑term health of UK car manufacturing matters too — especially for jobs and local investments.
The UK–South Korea trade deal is a strategic win in many respects:
Keeps tariff‑free access for most traded goods and protects exports. Modernises trade rules for digital services and procurement. Supports UK jobs and economic growth in key sectors like automotive and services.
However, it also poses challenges:
Lower local content requirements may weaken incentives for UK supply chain expansion. Consumers benefit, but domestic producers face tougher competition. Brexit‑related trade complications still shape how smoothly the benefits materialise.
For UK car users, more choice and better prices are likely positive outcomes — but the broader industrial implications will depend on how businesses, policymakers, and the government manage investment, supply chains, and innovation going forward.
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