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Industry reacts with fear to Trump tariff regime

All cars subject to 25% US import levy with immediate effect.

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UK automotive industry figures have reacted with dismay but also resignation after US President Donald Trump announced his long-threatened swathe of tariffs on global importers.

With immediate effect tariffs of 25% will be applied to all cars imported into the US, while all goods from the UK will be subject to tariffs of 10%. This is lower than for other countries, including the European Union which has been told it will face tariffs of 20%.

Tariffs are also expected to be applied to automotive components within the next few weeks. This will greatly affect manufacturers in America who use imported parts, including from the UK – reports have stated that the US-sourced content of BMWs built in South Carolina is as low as 30%.

Reacting to the tariff announcement, Mike Hawes, CEO of the Society of Automotive Manufacturers & Traders (SMMT) described them as another deeply disappointing and potentially damaging measure.

“Our cars were already set to attract a punitive 25% tariff overnight and other automotive products are now set to be impacted immediately – while we hope a deal between the UK and US can still be negotiated, this is yet another challenge to a sector already facing multiple headwinds,” Hawes commented.

“These tariff costs cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst UK producers may have to review output in the face of constrained demand,” he added.

“Trade discussions must continue at pace, therefore, and we urge all parties to continue to negotiate and deliver solutions which support jobs, consumer demand and economic growth across both sides of the Atlantic.”

Sue Robinson of the National Franchised Dealers Association commented that the tariffs imposed on the UK and other countries/trading blocs, particularly the European Union, pose significant risks to the sector and the global economy as a whole.

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“The cumulative effects of these tariffs will be profound, impacting our dealer members who have already shown remarkable resilience in the face of economic challenges, as well as manufacturers and the broader automotive industry,” Robinson said, joining calls for the Government “to take swift and decisive action to safeguard jobs and protect our industry during these unprecedented times.”

Philipp Sayler von Amende, Chief Commercial Officer at online automotive sales marketplace Carwow, described the tariffs as a significant new challenge for the UK automotive sector.

“These tariffs add further complexity for car manufacturers and their supply chains as they grapple with how to keep British-made cars price-competitive in the US market,” von Amende said.

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“In the short term, some manufacturers may absorb tariff costs to maintain competitive pricing until existing stock clears, while premium brands in high demand are more likely to pass them on to consumers – like Ferrari, which recently announced a 10% US price increase.

“They might try to avoid paying them entirely – we’re already seeing many European manufacturers accelerate their plans to expand US production to bypass import tariffs, with Volvo, Audi, Mercedes-Benz and Hyundai moving in this direction before today’s decision.”

According to von Amenda the full impact to UK car dealers and car buyers remains uncertain; “The tariffs could also drive a renewed focus on European production, marketing and sales efforts – increasing competition and potentially lowering prices in the region. What’s clear is that these tariffs will have far-reaching consequences, from factory workers to retailers and car buyers across the EU.

“Manufacturers need the confidence to invest, car dealers need access to stock, and consumers deserve choice at a range of prices. The Government must ensure that the UK remains a competitive and attractive market for automotive innovation and growth.”

The UK Government has so far adopted a ‘wait and see’ approach to the Trump tariff regime while also negotiating for a better deal. Speaking to business leaders following the announcement, Prime Minister Keir Starmer said that the Government would react with “cool and calm heads” and would take decisions in the coming days and weeks “guided only by our national interest, in the interest of our economy, in the interests of businesses around this table.”

Business and Trade Secretary Jonathan Reynolds said that the 25% tariff on cars imports to the US was one of the Government’s principal concerns. “There is no need for them,” he said, adding that the UK needs to negotiate to get the tariffs removed.

Dumping fears

A further major concern for the UK automotive market is that foreign manufacturers will divert production originally intended for the US market to other outlets, of which Britain would be particularly attractive as it currently imposes no tariffs on imports. The UK Government is being urged to consider applying quota limits to manufacturers importing cars into the UK.

Volume manufacturers Nissan, Toyota and Vauxhall all have major production plants in the UK and could be adversely affected by production diversions, a practice known as ‘dumping’. Chinese manufacturer BYD has already made major inroads into the UK market – just two years after launching into Britain, BYD now has a market share of 1.4% and growing, ahead of long-established brands including Citroën and Honda.

This story is being updated    

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