The UK car industry is among those poised for a big hit from President Trump’s latest wave of trade tariffs with a report warning that UK car plans should brace for an “extreme” hit
More than 25,000 jobs in Britain’s car industry could be lost after Donald Trump’s dramatic escalation of his global trade war.
A report warned of an “extreme” hit to UK car plants, putting around one in five manufacturing jobs in the sector at risk. The automotive industry is among those set to be left reeling as President Trump prepares to unveil details of his “Liberation Day” wave of tariffs on scores of US imports. Details are expected to be announced today and could apply from Thursday. The President has already confirmed an additional 25% levy on all car imports, with no special deal for the UK despite ongoing talks and our supposed long-lasting ‘special relationship.’
Chancellor Rachel Reeves yesterday warned the Cabinet trade tariffs will hit the British economy. She told ministers “global tariffs will have an impact on the UK as an open trading economy” but “securing a deal could mitigate some of those effects”, according to a No10 readout of the meeting. She also spoke to US counterpart, Scott Bessent, on Monday.
READ MORE: Donald Trump’s ‘Liberation Day’ tariffs – doomsday UK scenario and best outcome
Trade Secretary Jonathan Reynolds called it a “very serious and significant moment” for the UK. He revealed anti-dumping measures would be put in place to prevent a flood of cheap goods otherwise destined for the US.
Sir Keir Starmer acknowledged the UK was unlikely to be spared but ruled out a “knee jerk” response. The Prime Minister said “all options were on the table” to protect Britain from sweeping taxes on goods exported to the US. But he said he didn’t want a trade war with America.
Experts have been left guessing what tariffs the US will impose on the UK. However, the President has been critical of our 20% VAT – and could retaliate in kind – even though the same rate applies to all goods sold here.
Think tank the Institute for Public Policy Research says, with one in eight UK-built cars exported to the US, British vehicle manufacturers face an “extraordinary challenge”. Workers at Jaguar Land Rover and BMW-owned Mini’s Cowley factory in Oxfordshire are seen as some of the most exposed. Pranesh Narayanan, research fellow at IPPR, said: “Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry, affecting tens of thousands of jobs and putting the government’s growth plans at jeopardy.”
However, it added that “as one door closes another one opens”, with the UK well placed to capitalise on a transition to net zero. Mr Narayanan said: “There is huge untapped potential in manufacturing green planes, trains and automobiles and selling them at home and abroad. If the government uses the upcoming industrial strategy to drive investment in these sectors, this could be the spark that leads to thousands of new consumers to start buying British and buying green.”
Meanwhile, a new report from Aston Business School warns a full-scale trade war could cost the global economy £1trillion. Professor Jun Du, its co-author, said: “The picture for tariff measures may not be clear at the moment, but what is clear is that economies like the UK need to plan for various eventualities and start to put mitigating measures in place.”
The Office for Budget Responsibility reiterated that President Trump’s tariffs could wipe out the Chancellor’s financial buffer if the economy weakens still further. The UK has been battling to strike a deal to protect British businesses from the worst of the tariffs, which is believed to focus on areas like AI and technology. But insiders now concede it won’t be done in time to lessen the impact.
Lord Peter Mandelson, the UK’s ambassador to Washington, was believed to have held last minute talks. Speaking on a visit in London, Mr Starmer said: “Look, the likelihood is there will be tariffs. Nobody welcomes that, nobody wants a trade war. But I have to act in the national interest and that means all options have to remain on the table.”
The PM said businesses want a “calm and collected response to this, not a knee-jerk” – and said he hoped a deal could lessen the impact. He rejected claims he’d been played by Mr Trump, saying: “The US is our closest ally. Our defence, our security, our intelligence are bound up in a way that no two other countries are. So it’s obviously in our national interest to have a close working relationship with the US, which we’ve had for decades, and I want to ensure we have for decades to come.”
Mr Reynolds said the UK was in the “best possible position of any country” to reverse the tariffs. He said: “I do believe not only can we get to a place where we are avoiding tariffs on each other, but we’re also strengthening that relationship.” He added: “I believe that the framework of an agreement is certainly in place.”
Lord Darroch, former British ambassador to the US, warned the UK must not be a “pushover”. He said: “I just think you need to be careful about, as it were, giving the Trump administration, giving the president a win on all of this, because he already thinks tariffs are a great idea.
“And if he starts getting concessions offered by the rest of the world, to keep them away, he’ll keep using them. And every time there is some grievance or some dispute in relations, he’ll come back and threaten tariffs or impose them and then say, ‘do what I want you to do to get them lifted’.”
