British carmakers are set to meet with ministers on Friday morning to discuss their response to the upcoming 25% tariffs on car imports announced by US President Donald Trump, which are set to take effect on April 3. The UK government is working to secure exemptions from these tariffs, though some car companies fear it may now be too late to delay the measure and are instead focusing on exploring support options.
The potential impact of these tariffs on the UK economy is significant. The government’s official forecaster, the Office for Budget Responsibility (OBR), has warned that such trade taxes could reduce economic growth by as much as 1% in the worst-case scenario, potentially wiping out £9.9 billion of the UK government’s fiscal headroom.
The UK government’s response has been cautious. Treasury minister Darren Jones stated that the UK would not engage in a “trade war” with the US and would take a “different approach” compared to other nations. This contrasts with countries like Germany, which has taken a firmer stance against the tariffs, urging Europe to “respond firmly.”
For the automotive industry, the tariffs represent a significant threat. The UK’s car exports to the US, worth £9 billion, would be heavily affected. Companies like Ineos Automotive, whose biggest market is the US, are particularly vulnerable, as their manufacturing is based in the EU. Ineos CEO Lynn Calder expressed frustration with the EU’s failure to negotiate with Trump and warned that the EU must decide whether it wants to maintain a viable automotive industry.
The tariffs are set to hit the car sector in two stages: the first on April 3 for vehicles, followed by tariffs on parts a month later. This could disrupt UK carmakers, particularly as UK car production was already down by 12% in February compared to the previous year. The industry is likely to ask for government support to help mitigate the economic impact.
The broader global context includes other countries, such as France and Canada, vowing to retaliate against the US tariffs. Canadian Prime Minister Mark Carney, a former Bank of England governor, has expressed his country’s intent to “fight” these trade measures, signaling a potential breakdown in long-standing Canada-US relations.
The UK is still negotiating with the US over the full range of tariffs, not just those affecting the car industry. However, much of the outcome will depend on the stance taken by President Trump, who has made it clear that he does not intend to offer carve-outs for car imports, despite ongoing global discussions on “reciprocal tariffs.”