President Trump has increased tariffs on car imports to raise revenue to offset his promised tax cuts and revive a declining US industrial base. Here is the expected impact on Britain and its carmakers:
What are the tariffs?
Donald Trump said he would implement a global 25 per cent tariff on car imports. This is set to come into force on April 3.
The levies will initially target fully assembled vehicles but their scope will expand over the following month to include car parts such as engines, transmissions, powertrain components and electrical systems. They could expand even further after that, a statement from the White House said.
Trump described the tariffs as “permanent” and said he was not interested in offering any carve-outs. The levies would be instituted on top of any other duties already in place, compounding the problems for car manufacturers.
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How it could affect the UK economy
The US is the second biggest export market for cars produced in the UK, accounting for 16.9 per cent of exports in 2024 or about 100,000 vehicles, according to the Society of Motor Manufacturers and Traders (SMMT), the trade body.
Overall, UK passenger car exports to the US were worth £7.6 billion in 2024, the SMMT said.
A 2024 study by the US International Trade Commission predicted that a 25 per cent tariff on imports would reduce imports by almost 75 per cent, meaning that the UK’s car industry could take a significant hit from the levies.
In turn, this could have a negative effect on the UK economy, particularly some of its important manufacturing centres.
“Piling these tariffs on top of the others already expected on April 2 will sap business confidence and add further uncertainty for both UK and US firms,” said William Bain, head of trade policy at the British Chambers of Commerce.
At the same time, given that most UK exports are towards the more expensive end of the car market, British manufacturers will likely find it easier to pass the cost of the tariffs on to consumers than mass-market manufacturers in Europe and elsewhere.
The SMMT added that the US had also been a growing market for the UK in contrast to the EU and China, where shipments fell considerably last year.
The trade body added that exports to the US rose by 38.5 per cent in 2024. At the same time, although the EU accounts for more than half of all UK car exports shipments to the bloc fell by 24.3 per cent.
Exports to China, the UK’s third largest trading partner, fell by 21.8 per cent.
Separate data from HMRC suggests that car exports to the US increased by nearly a quarter in November after Trump won the election as car manufacturers rushed to ship cars across the Atlantic ahead of any possible tariffs.
Which UK car manufacturers will be affected by the tariffs?
While the UK’s economy might be less exposed to Trump’s car tariffs than major manufacturers such as Germany or Mexico, the US is an important market for a number of the luxury car manufacturers in Britain.
The US was the top sales market for British-based Jaguar Land Rover last year, exceeding sales in the UK and China.
In addition, Aston Martin made sales of £591 million there last year — more than the entire Europe, Middle East and Africa region excluding the UK.
Aston Martin’s chief executive, Adrian Hallmark, warned analysts last month about the challenge of potential tariffs. The company’s stock fell by 3¾p, or 5.1 per cent today.
Luxury car manufacturers will find it hard to move production
During remarks at the White House yesterday, Trump said that the tariffs would encourage companies and their suppliers to set up shop in the US.
“Anybody who has plants in the United States, it’s going to be good for,” he said.
However, luxury producers are unlikely to be able to relocate easily overseas, given that being manufactured in the UK is a significant part of their identity.
Aston Martin’s main production site is in Gaydon, Warwickshire, while its second facility is in St Athan, South Wales.
