Huge new US tariffs put £7bn of UK car exports at risk

President Donald Trump has announced huge 25 per cent tariffs on all cars imported to the US in a move that threatens up to £7bn of UK vehicle exports.

Last year, the automotive industry accounted for 14 per cent of all UK exports to the States, with Land Rover and MINI especially exposed to a big tariff hit — the US is JLR’s biggest market, ahead of even the UK and China. 

Rachel Reeves, the UK chancellor, was quizzed on the tariffs by the BBC on the morning after President Trump’s latest announcement. She stated the UK is “in extensive talks, right now ahead of increases in tariffs” as the Government attempts to carve out a trade agreement with the US Government that would eliminate the risk of tariffs across a range of industries, including cars and steel. 

“That’s what we’re working on and we’ve got a few more days of negotiations before any tariffs come in,” she said.

Around half of the 16 million cars sold annually in the US are imported, and the Trump administration believes the imposition of tariffs will lead to more foreign brands investing in US factories. A recent report by the US International Trade Commission predicted that a 25 per cent tariff would reduce imports by 75 per cent.

The European Union and Canada, which are also facing a huge hit on US car exports, have been warned by President Trump that retaliatory action will risk an even stronger response. “If the European Union works with Canada in order to do economic harm to the USA, large-scale tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had,” a Trump social media post warned last night.

Speaking to Auto Express, Professor of Business Economics at the Birmingham Business School, David Bailey, described the situation as a “perfect storm”.

“These tariffs will have a big impact on the UK and EU auto industry, which is already being squeezed by falling sales in China, stagnant demand in Europe, and slow EV take up,” Bailey said.

Bailey also pointed out that the likes of Aston Martin, JLR and Rolls-Royce are likely to be the heaviest affected; tariffs as high as 25 per cent could add as much as $27,000 to the price of a new Range Rover.

In his announcement made on Wednesday, Trump invited international manufacturers to build factories within the US to avoid additional levies, saying: “If [cars are] made in the United States, there’s absolutely no tariff.”

The Society of Motor Manufacturers chief executive Mike Hawes declared the new tariff  announcement disappointing, but not surprising.

“The UK and US auto industries have a long-standing and productive relationship, with US consumers enjoying vehicles built in Britain by some iconic brands, while thousands of UK motorists buy cars made in America,” he said. 

“Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship, benefiting consumers and creating jobs and growth across the Atlantic. The industry urges both sides to come together immediately and strike a deal that works for all.”

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