Trump tariffs a perfect storm for battered UK car industry

President Donald Trump has hit the UK motor industry with unprecedented 25 per cent tariffs on all cars and parts it exports to the US in a move that could result in thousands of job losses.

As part of America’s so-called “Reclamation Day”, President Trump announced sweeping tariffs on the entire globe, including the UK. While Brexit meant the UK managed to escape the 20 per cent tariff placed on imports from the EU (most British products will instead incur a 10 per cent additional duty), Trump did impose an all-encompassing 25 per cent tariff on all automotive-related imports, regardless of the country of origin.

Such an announcement has caused seismic ructions within the UK car industry, because the automotive sector accounted for around 15 per cent of exports to the States in 2024, with a total value of £9 billion.

Speaking to Auto Express, the 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 electric vehicle take-up,” Bailey said.

The professor told Auto Express that high-end firms like Jaguar Land Rover, Rolls-Royce, Bentley and Aston Martin will be the most heavily affected; in the financial year ending April 2024, the USA was JLR’s second-largest market, following China.

Reacting to the imposition of tariffs, a JLR spokesperson said: “Our luxury brands have global appeal and our business is resilient, accustomed to changing market conditions. Our priorities now are delivering for our clients around the world and addressing these new US trading terms.”

Headed up by Prime Minister Keir Starmer and Business Secretary Jonathan Reynolds the UK government had hoped to secure a deal to spare UK-based manufacturers of the burden of such hefty tariffs. However, despite some positive-sounding rhetoric at the beginning of the negotiation process, the UK was unable to secure a deal in time, beyond that of only invoking the 10 per cent “baseline” tariff for non-automotive goods.

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; the President previously stated that “If [cars are] made in the United States, there’s absolutely no tariff.”

With this in mind, many manufacturers will be looking to invest in factories within the US in order to dodge import duties, something that could result in thousands of job losses in the UK. Bailey told Auto Express that the West Midlands is likely to be the area of the country most affected, given this is where many large firms such as JLR have their factories.

Chief executive of the UK’s Society of Motor Manufacturers and Trader, Mike Hawes, described the situation as “yet another challenge to a sector already facing multiple headwinds”. 

Hawes warned that these tariffs “cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst UK producers may have to review output in the face of constrained demand.”

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