The United Kingdom does not want to get caught in a US–EU trade war. Under-the-surface tariffs can still make a serious dent in its automotive industry. Vehicles are still the UK’s most valuable export to the UK, with 101,000 units exported last year worth over £9 billion. The first round of tariffs on autos takes effect April 3. A month later, tariffs on auto parts from Mexico go into effect.
UK automotive manufacturers are competing for support from the government. Their chances of success are growing dim as they try to reach a deal with US president Donald Trump. Most recently, Trump has invoked powers created for difficult national security situations to implement the proposed tariffs.
On Friday morning, company reps faced off with local and state officials. They calculated how they would react to the now-inevitable 25% tariffs on US car imports that will begin rolling out next week. The economic consequences could be dire. The Office for Budget Responsibility (OBR) has cautioned that these tariffs could reduce economic growth by up to 1%.
Ineos Automotive, an upstart British carmaker, told the BBC that their concerns were real. They termed the tariffs a “serious menace” because they are so reliant on the US market and have their manufacturing home in the EU. Frustration from the chief executive of Ineos, Lynn Calder. She said that she was “hugely frustrated” at the inaction and continued failure to negotiate by EU politicians with Trump.
“Not be jumping into a trade war.” – Treasury minister Darren Jones
The UK government is still working to be exempted from a range of US import tariffs. These three levies are scheduled to begin at midnight on April 3rd. The OBR’s report ahead of last Wednesday’s Spring Statement raised the alarm in ominous tones. Furthermore, it showed that these trade taxes could erase Rachel Reeves’s £9.9 billion fiscal rand against debt rules.
“There is no easy answer.” – Treasury minister Darren Jones
Share prices of car companies around the world took a dramatic tumble immediately after the news of Trump’s tariffs announcement on … Read moreFriends of the Earth Other countries including France and Canada have promised retaliatory trade measures in response to the US. Mark Carney, Canada’s newly appointed central banker and the former governor of the Bank of England, is prepared to act. His commitment that Canada must “fight” marks a major change in the historically polite relationship between Canada and the US.
“Fight.” – Mark Carney, former governor of the Bank of England
According to the OBR, introduction of tariffs would almost completely eliminate the government’s currently forecast fiscal headroom by 2029-30. This extreme measure would reduce it “to near zero.”