Donald Trump announcing new tariffs in his Rose Garden speech (Image: Getty)
Sir Keir Starmer must provide support for UK carmakers to prevent jobs being lost as a result of Donald Trump’s tariffs, industry experts have warned. A 25% tariff on all vehicles exported to the US came into force on Thursday, while Mr Trump’s 10% tariff on other UK products will hit exports of car parts.
Prof David Bailey, of Birmingham University’s Department of Management, said British carmakers were already squeezed by falling sales in China, stagnant demand in EU countries and difficulties convincing motorists to switch to electric vehicles. He said: “Tariffs will make UK exports to the US more expensive. That will reduce demand. It’s going to hit sales and therefore production in the UK. It means lower profits and therefore job losses.”
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The UK car industry employs 813,000 people, including 198,000 directly involved in manufacturing. Vehicles are the biggest UK export to the US, with sales of ￡8.3billion to American buyers each year.
Luxury brands have been particularly successful and senior managers from Bentley, based in Cheshire, and Jaguar Land Rover, with plants in the West Midlands and Merseyside, among the executives attending a No 10 meeting with the Prime Minister on Thursday. Aston Martin, Rolls Royce and Mini are other brands likely to be affected by the tariffs.
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The UK currently imposes a 10% tariff of its own on imports of US vehicles, and Prof Bailey said it may be possible to do a deal with the White House in which both countries cut charges,
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“If the US tariffs remain in place then there will be a hit to the UK car industry. Jaguar Land Rover sold 100,000 cars to the US last year.
“The industry would want to see support.”
He said carmaking should feature in a new industrial strategy planned by the Government while manufacturers could benefit from cuts in energy bills, which are 50% higher than the EU average.
Other options include relaxing strict rules which require carmakers to cut the number of new petrol and diesel cars they sell over time, in the run-up to a complete switch to electric vehicles in 2030.
The Society of Motor Manufacturers and Traders, which represents carmakers, said firms “may have to review output” in an apparent warning that car production could be cut. Chief executive Mike Hawes said: “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.
“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.”
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The US is second-largest export market for British-made cars after the European Union, with more than 101,000 units shipped in 2024.
If jobs are lost then the region hardest-hit would probably be the West Midlands, which contains key “red wall” Parliamentary constituencies that switched from Conservative to Labour in last year’s general election.
A Jaguar Land Rover spokesperson said: "Our luxury brands have global appeal and our business is resilient, accustomed to changing market conditions. Our priorities now are delivering for our clients around the world and addressing these new US trading terms."
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Asked about job losses in the carmaking, Business Secretary Jonathan Reynolds said: “I know everyone in the automotive sector in particular will have those concerns.
“The products that we have, in the main, are very successful at exporting to the US, from Jaguar Land Rover, BMW, Aston Martin, these are often the higher value parts of the market, so the impact of tariffs will be slightly different to those.
“What I am committed to – and what I genuinely believe we can deliver – is a position where not only are we not in a position where we’ve got to think about job losses or about the loss of exports, but we can strengthen that relationship. That is what we’re committed to doing.”