How Trump’s tariffs could impact the UK car industry

The global car industry has long been a complex web of international trade, with manufacturers and suppliers relying on cross-border commerce to keep production running smoothly. Over the years, trade tariffs and political decisions have shaped the landscape, potentially none quite so profoundly as those being issued by a U.S. President who seems to be reshaping trade policy on a daily basis.

In his last term, Trump launched tariffs primarily focused on steel, aluminium, and car imports, with a specific emphasis on cars and auto parts. These tariffs ranged from 10% to 25% and were part of the broader strategy to boost American manufacturing and create jobs. While these tariffs were primarily directed at China, their effects rippled across the globe, including on the UK automotive sector.

While the U.S. may not be the largest market for UK-made cars, more tariffs implemented by Trump will have several potential effects on the industry, both directly and indirectly. First off,  UK car manufacturers that export vehicles to the U.S. could face higher costs. For example, luxury brands like Rolls-Royce and Aston Martin, which have a strong presence in the U.S., may see their cars becoming more expensive for American consumers due to these added duties. And this could affect demand for UK-made cars in one of the world’s largest car markets.

Supply chain disruption could likely be another issue. The UK car industry relies heavily on a global supply chain for components like engines, electronics, and body parts. Trump’s tariffs on steel and aluminium disrupted global supply chains last time round which affected manufacturers worldwide, including those in the UK. Ongoing, more increased material costs and supply shortages will almost certainly lead to higher production costs, making UK manufacturers less competitive.

Trump tariffs are also sending a message to foreign investors that the U.S. might not be a stable place to do business - evidenced by recent stock market figures.  

UK automakers that considered expanding into the U.S. or increasing production there during the more trade-friendly Biden era may now be deterred by the risk of tariffs. This could have much longer-term consequences for any UK manufacturers who ‘d been hoping to benefit from the U.S. market and its large consumer base.

UK manufacturers already face tariffs and border checks when exporting to EU markets, thanks to Brexit and any new tariffs imposed by Trump simply add another layer of complexity. UK manufacturers are now dealing with multiple layers of trade barriers — the EU tariffs, U.S. tariffs, and potential barriers within the UK itself. Delays in shipments, higher production costs, and reduced profitability for UK car makers seem almost inevitable.

On the flip side, some UK car manufacturers might still see an opportunity to boost local production in the U.S. as a way to sidestep the tariffs. Jaguar Land Rover and BMW have U.S. production facilities, and expanding these operations could help mitigate the impact. However, this strategy comes with its own set of challenges, including the cost of setting up or expanding manufacturing facilities there.

While Trump’s tariffs will undoubtedly be a major disruption, the global political landscape is always changing.  In the meantime, UK manufacturers will need to keep a close eye on any new policies coming from the Oval office and prepare for more trade shifts. Ultimately, the industry’s success will depend on its ability to pivot, innovate, and maintain its reputation for quality and craftsmanship, regardless of any global trade challenges.