A UK-Mexico trade deal is unlikely to be signed before the end of the Brexit transition period, raising fears of a hike in tariffs.
Unless the Department for International Trade (DIT) is able to secure a rollover of the EU-Mexico trade agreement, Britain will trade with Mexico on World Trade Organization (WTO) terms from Jan 1.
However, sources told Politico the two sides had reached an impasse in negotiations.
Without an agreement, the British automotive sector would be especially hard hit as exports of cars and trucks to Mexico, worth £160.4m last year according to HM Revenue and Customs data, would face 20pc tariffs.
Last year the UK imported £50.2m worth of parts, components and accessories from Mexico, which would also face levies without a deal.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “Given the UK will be an independent trading nation at the end of the year, it is essential that all sides swiftly conclude an agreement – ahead of the end of the transition period – to ensure automotive businesses are not hit with WTO tariffs, a situation that would damage UK competitiveness at the worst possible moment.”
A DIT spokeswoman said: “There is a deal with Mexico on the table offering the same terms they had under the EU. Talks are continuing and we are in positive discussions on a number of issues. We are putting a lot of negotiator resource into getting an agreement. However, we won't do a deal at any price.”
Talks for rollover deals with some other countries such as Ghana are also understood to have stalled before the Dec 31 deadline.