The world’s car industry has been disrupted and the ripple effects would shake up the entire supply chain.
President Donald Trump on Wednesday announced a staggering 25% tariffs on vehicles imported into the United States.
The president laid out his plans of U$100bn worth of tariffs, dealing a blow to the UK and Europe.
“This is the beginning of liberation day in America,” Trump said. “This is very modest. What we’re going to be doing is a 25% tariff on all cars not made in the United States.
“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years.”
The president said the move would generate $100bn of revenue for the US. Britain’s car industry will probably be targeted, although Trump did not make that clear.
If the UK is included, tariffs would hit more than U$8bn of passenger vehicle sales, based on the Commerce Department figures.
Even if Britain is given a carve-out, the industry fears some cars could be hit by tariffs if they contain too many EU parts.
If the UK is included, it would be a humiliation for Jonathan Reynolds, the Business Secretary, who travelled to the US last week for talks with his counterpart, Howard Lutnick, in the hope of avoiding the worst of the trade war.
Andrew Griffith, the shadow trade secretary, said: “This auto tariff announcement is concerning. The sector is under pressure and British jobs are clearly now at real risk.
“I’m afraid Labour have dropped the ball here. This Government has never laid out a plan, took too long to get round the table with Trump and, as of now, they have nothing to show for it.”
The UK automotive industry’s main trade body described the tariffs as disappointing and said it seems likely that they will be applied to UK-made vehicles.
The Society of Motor Manufacturers and Traders said the two countries’ carmakers have a long-standing and productive relationship, with American consumers enthusiastic supporters of iconic British brands and thousands of UK motorists buying cars made in the US.
Mike Hawes, the SMMT chief, said: “Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship, benefiting consumers and creating jobs and growth across the Atlantic.
“The industry urges both sides to come together immediately and strike a deal that works for all.”
Tariffs on imported cars would be a significant blow to Europe. German manufacturers sold U$24.9bn of passenger vehicles in the US last year and manufacturers have warned trade barriers would be a hammer blow for an already struggling industry.
Trump has previously complained about the imbalance in trade between the US and Europe on cars. He said earlier this month: “We’re not allowed to sell cars there. We sell no cars to Europe … the European Union is very nasty.”
On Wednesday night, Ursula von der Leyen, the president of the European Commission, said: “I deeply regret the US decision to impose tariffs on EU automotive exports.
“Tariffs are taxes – bad for businesses, worse for consumers, in the US and the EU. The EU will continue to seek negotiated solutions, while safeguarding its economic interests.”
Shares in US carmaker Tesla, led by Mr Trump’s ally Elon Musk, fell 5.6pc yesterday ahead of the announcement. Tesla’s decline led to a broader US stock market drop. The Nasdaq 100, the tech-heavy index which includes Tesla, fell 2pc as tariff fears roiled investors.
General Motors’ share price dropped by 3.1pc, while shares in Stellantis, which owns brands ranging from Vauxhall to Chrysler, have slumped by nearly 10pc since the start of the year.
