That’s exactly what the Trump administration intends to do on imported cars beginning April 2, with a 25% tariff. This decision could have far reaching impacts to dramatically alter the global automotive industry. This ruling is likely to push car manufacturers to invest and build in the United States. The UK government is not going to pick a trade war with the US over these tariffs. Well, the Prime Minister just made that point crystal clear.
The tariffs would be a huge ratchet in the wrong direction for the UK car manufacturing sector. This sector is responsible for directly employing nearly 198,000 workers and supporting approximately 813,000 jobs across the broader economy. As the UK’s car exports to the US are worth approximately £7.6 billion a year, such changes would have far-reaching effects.
Society of Motor Manufacturers and Traders (SMMT) said it was “bitterly disappointed” by the announcement. They said it was “not surprising” in recognition of how ingrained these issues have become. The environmentalist organization has been pushing both the British and American governments to work out an agreement to limit the deal’s possible harmful effects.
“The industry does not want a trade war, but it’s important that we keep all options on the table.” – Sir Keir Starmer
Jaguar Land Rover (JLR) is most exposed of all UK-based manufacturing car firms to these tariffs. The company is controlled by the Indian conglomerate Tata motors. British manufacturers are far from the only ones. The most pain will be borne by those companies—like Tesla, owned by Elon Musk—which are disproportionately affected by these rules.
“The tariff impact on Tesla is still significant.” – Sir Keir Starmer
President Trump thinks tariffs will produce the “tremendous growth” that’s coming to the US car industry. This, he claims, will lead to job creation and increase investment in the U.S. He contends that these indirect measures will, in the long run, help domestic production.
“The Americans may think they’re boxing the world car industry out of the US, but the reality is they are going to box the US car industry out of the world.” – Sir Keir Starmer
The SMMT stresses that the US is the second-largest market for UK cars, behind the European Union. Reaching a favorable trade agreement now is more important than ever. That’ll protect Americans’ economic security and drive innovation in the auto industry.
Yusuf Allinson, an industry analyst, warned that these tariffs “represent a grave danger to a UK car manufacturing sector in transition,” highlighting the risks associated with changing market dynamics. Locomotive lawmaker John Neill called the tariffs “the biggest gift to Chinese car industry.” He warned that emerging global players would be able to fill the gaps in markets hurt by these tariffs.
While the UK government remains in discussions with the US administration, there is cautious optimism that a trade deal can be reached before the tariffs are enacted. For American workers and businesses, this negotiation holds the potential to protect American jobs and investments in both economies.