Donald Trump’s move is likely to put a financial squeeze on automakers which depend on global supply chains – so much so British jobs are “clearly now at real risk”
British jobs in car manufacturing are “clearly now at real risk” after Donald Trump yesterday imposed 25% tariffs on vehicle imports.
The unpredictable US President’s latest move comes hours after Rachel Reeves, Chancellor of the Exchequer, announced sweeping cuts to benefits to rein in the budget and boost defence spending. The Office of Budget Responsibility halved the UK’s economic growth forecast from two per cent.
Now further economic pain in the UK is feared as our largest vehicle export market is the US. The UK sold some £6.4bn in motor vehicles to the country in 2023, according to the Office of National Statistics. Reacting to Mr Trump’s brutal vow, Andrew Griffith, the shadow trade secretary, said British jobs are “clearly now at real risk” and he called the move “concerning”.
But Mr Trump believes the tariffs will “continue to spur growth” in his nation, as he feels it will lead to more factories being pened across the US.
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The bullish US leader told reporters: “This will continue to spur growth. We’ll effectively be charging a 25 per cent tariff.” To underscore his seriousness about the tariffs directive he signed, Mr Trump said, “This is permanent.”
Shares in General Motors fell roughly three per cent in Wednesday trading. Ford’s stock was up slightly. Shares in Stellantis, the owner of Jeep and Chrysler, dropped by around four per cent.
Mr Trump has long said that tariffs against auto imports would be a defining policy of his presidency, betting that the costs created by the taxes would cause more production to relocate to the United States while helping narrow the budget deficit. But US and foreign automakers have plants around the world to accommodate global sales while maintaining competitive prices — and it could take years for companies to design, build and open the new factories Mr Trump is promising.
Mary Lovely, an economist in the US and senior fellow at the Peterson Institute for International Economics, said: “We’re looking at much higher vehicle prices. We’re going to see reduced choice. … These kinds of taxes fall more heavily on the middle and working class.” She said more households will be priced out of the new car market — where prices already average about $49,000 (£38,000) — and will have to hang on to aging vehicles.
Talks between the UK and US on avoiding tariffs remain ongoing, with Trade Secretary Jonathan Reynolds visiting Washington last week to discuss an “economic deal”. However, Mr Trump’s latest one is feared to eliminate all of Ms Reeves’ margin of error in her budget.
Media reports have suggested Britain could slash the digital services tax – a levy on big tech companies – in order to stave off American tariffs, though Ms Reeves appeared to rule this out on Wednesday.
