The Nikkei news agency reports that Nissan and Toyota are demanding the UK Government covers any additional tariffs that could arise on export shipments if the UK and EU fail to agree a free trade agreement before the end of the year.

The UK is currently in a transition period after formally leaving the EU bloc at the end of January. Trading arrangements have stayed unchanged this year, with UK shipments to and from the EU treated as if the UK is a member state.

However, if the UK and EU cannot agree on a deal and the transition period ends on December 31, then shipments of new cars from the UK to the EU would be subject to a 10% import tariff.

The Nikkei report said Nissan and Toyota executives acknowledge that they are demanding that the UK cover an increase in tariffs. European carmakers are also calling on the UK Government to do the same for them, the report added.

Negotiations between the UK Government and EU Commission continue, but there have been a number of serious disagreements between the two parties and the time left to conclude a free trade deal is short.

See also: COMMENT – UK-EU disharmony and worries for UK auto sector