The UK automotive industry is getting ready for once-in-a-century challenge. That’s exactly what the United States has started doing today with new tariffs on imports. The tariffs place a crushing 25% tax on automobiles that ship to the US. There’s a 10% tariff on certain automotive parts, hitting big manufacturers as well as smaller suppliers up and down the UK. This comes in a context where the industry was already struggling with falling production numbers and economic conditions.
The UK’s automotive sector was already under pressure before these punitive tariffs were announced. Production of cars subsided from previous highs of more than 1.5 million vehicles per year prior to the COVID-19 pandemic to as low as 800,000 in recent years. Barkley Plastics, a key supplier of parts to major carmakers like Jaguar Land Rover, Nissan, Toyota, and Mini, reported that the new tariffs would represent approximately 10% of its sales. I will tell you honestly, as I mentioned before, this tariff scenario has put a very scary implication into our operations, Anthony Wills, representative of Barkley Plastics.
“For us personally, it represents 10% of our sales. So it’s clearly going to be a big blow, especially with the current economic headwinds that we’re all experiencing,” – Anthony Wills.
These challenges continue to plague smaller companies as well. Even smaller businesses, such as Nomadic, a Belfast-based watchmaker, are under increasing pressure. According to Wang, Nomadic currently derives 22% of their sales from the US market. Denise Cole, the company’s financial director, told us that she is adamantly against the tariffs. She added that Nomadic’s biggest order – £1.2 million ($1.6 million) – was for the US. She testified that these new tariffs would greatly erode their sales.
“I’ve seen UK manufacturing decimated and the same has happened in America so he’s looking after his own which is exactly what it says on the tin with Trump,” – Denise Cole.
As new tariffs go into effect, they would likely squeeze Nomadic’s sales further, threatening their continued viability as a going concern. Cole pointed out that the unexpected expenses stemming from these tariffs put massive financial strain on her already struggling business.
“That’s added £35,000 to my costs – that’s a whole person’s wages,” – Denise Cole.
The tariff’s larger implications reach far past a single company. Wales, for instance, sold £2.2 billion worth of goods to the US last year, primarily machinery and equipment produced by smaller manufacturers. These new trade barriers represent a more tangible threat to revenue streams. They would lead to the loss of tens of thousands of jobs in the UK automotive supply chain.
Matt Harwood, another industry mouthpiece, underscored the uncertain plight of small suppliers under these tariffs. He noted that even before those challenges, including COVID-19 disruptions and semiconductor shortages, had already begun making production volumes a challenge to forecast. The enactment of new tariffs only makes this stiff operating environment all the more dangerous.
“Covid-19, chip shortages, and broader supply chain disruptions have made volumes unpredictable in recent years. These new US tariffs threaten to push that number even lower, which would be particularly damaging for smaller suppliers like us, who operate on tight margins,” – Matt Harwood.
He highlighted that if demand dropped they would face rapid business closures. This would be devastating, causing mass layoffs in an industry that is highly reliant on its workforce.
“So our main concern is how the US tariffs put tens of thousands of jobs at risk within the UK automotive supply chain,” – Matt Harwood.
These tariffs represent a devastating hit to the UK automotive sector. With recovery efforts ongoing at an unprecedented level, this news could not come at a worse time. With existing challenges compounded by new trade restrictions, industry leaders are calling for urgent support to navigate this tumultuous period.