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UK Automotive Sector Braces for Impact as US Car Tariffs Loom: Thousands of Jobs at Risk
New 25 percent tariffs imposed by the United States on car imports threaten to endanger up to 25,000 jobs within the UK automotive manufacturing sector, according to a new analysis from a leading think tank.
The Institute for Public Policy Research (IPPR) warns that President Trump’s levies on vehicles manufactured in Britain and destined for the United States market could significantly increase prices – potentially adding nearly $30,000 to the cost of models like Range Rovers. This, the IPPR states, would place ‘extreme pressure’ on British automotive firms and ‘threaten jobs and economic growth’ throughout the industry.
With predictions indicating a decline in exports to America due to these ‘reciprocal’ tariffs impacting both allied and non-allied nations, the IPPR highlights employees at major manufacturers such as Jaguar Land Rover and the Mini factory in Cowley as being particularly vulnerable.
UK Car Exports Face Significant Headwinds
Data reveals the critical importance of exports to the UK automotive industry. A substantial majority, eight out of ten vehicles produced in Britain, are shipped overseas. In 2024, of the 603,565 cars built for international markets, three key regions accounted for the bulk of destinations, with the US being a major recipient.
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While the European Union received 54 percent of these exports and China 6.6 percent, a significant 16.9 percent were directed towards US ports.
This translates to approximately 102,000 cars, valued at an estimated £9 billion, from British assembly lines ending up in the United States in the last year. This figure represents one in eight, or 13 percent, of all passenger vehicles manufactured domestically in 2024.
Expert Analysis: Tariffs Could ‘Destabilize’ UK Car Manufacturing
Pranesh Narayanan, research fellow at IPPR, emphasized the potential severity of the situation: ‘Trump’s tariffs possess the considerable capacity to entirely destabilize the UK car manufacturing industry, jeopardizing tens of thousands of livelihoods and imperiling the government’s economic expansion plans.’
Researchers at the University of Birmingham have also issued stark warnings, highlighting the West Midlands region, home to automotive giants like Jaguar Land Rover and Aston Martin, as being disproportionately affected. Their analysis stated: ‘The magnitude of a decision enacted thousands of miles away, particularly on the West Midlands, cannot be overstated. Rather than a minor setback, the West Midlands automotive sector could be confronted with a sudden and catastrophic economic shock wave,’
Trump Expected to Impose Tariffs, UK Exemption Fails
The US President is widely expected to implement his pledge to impose 25 percent tariffs on all foreign-manufactured vehicles entering the US, a move intended to stimulate domestic business and safeguard American jobs.
Keir Starmer acknowledged the UK’s vulnerability, confirming that appeals for exemption from the tariffs had been unsuccessful.
The Prime Minister also recognized the ‘likelihood’ of Britain encountering substantial and damaging levies on exports to the US, coinciding with what President Trump has termed ‘Liberation Day’.
Chancellor Rachel Reeves has reportedly informed the Cabinet of the anticipated significant economic repercussions, particularly for automotive manufacturers.
Industry experts predict that the price of British vehicles sold in America will increase by thousands of dollars as a direct consequence of these tariffs. This price surge could significantly diminish demand for UK-made vehicles in the US market, thereby amplifying the risk to British automotive jobs.
Industry Data Highlights Sector’s Importance and Vulnerability
The Society of Motor Manufacturers and Traders (SMMT) reports that the automotive manufacturing industry directly employs approximately 198,000 individuals, and a total of 813,000 across the broader supply chain and related sectors.
Reacting to the news of the proposed tariffs, SMMT chief executive Mike Hawes stated that while ‘not surprising’, the development was ‘nevertheless, disappointing’.
His remarks coincided with the SMMT’s confirmation of a concerning trend: UK automotive production had experienced its twelfth consecutive month of decline in February, with total output of cars and vans falling by 11.6 percent to 82,178 units for the month.
David Bailey, Professor of Business Economics at Birmingham Business School, described the present conditions facing British car manufacturing as a ‘perfect storm’.
He cautioned that the tariffs would have a ‘big impact’ on manufacturers in both the UK and Europe, who are already facing mounting pressures from factors such as ‘falling sales in China, stagnant demand, and slow electric vehicle adoption’.
Which UK Car Makers Face the Greatest Risk?
Several UK-based car manufacturers are anticipated to bear the primary burden of the 25 percent tariffs.
However, research fellows Dr Matt Lyons and Dr Huanjia Ma from the City-Region Economic Development Institute at the University of Birmingham have identified automotive manufacturers in the West Midlands region as facing the most substantial repercussions.
Their study estimates the overall cost of the US tariffs to the UK economy to be £9.8 billion in GDP between 2025 and 2030, potentially placing up to 137,000 jobs at risk across various sectors.
‘Our analysis indicates that the West Midlands, a crucial center for automotive manufacturers and their extensive supply network, is projected to absorb the most significant impact, suffering a £6.2 billion reduction in GDP, representing 62 percent of the total UK-wide impact,’ they stated.
‘The West Midlands is home to major manufacturers including Jaguar Land Rover, Aston Martin, Changan Automotive, and a substantial cluster of component suppliers. A prior study in 2023 revealed that 22 of the 50 largest automotive firms in the region were already vulnerable to insolvency due to inadequate liquidity levels.’
The research further projects that the West Midlands region will experience a £6.2 billion decrease in GDP (62 percent of the total national impact) and a £4.6 billion loss in gross value added (GVA).
The North West region is also expected to experience significant losses, with an anticipated £2.1 billion decline in GDP and £1.8 billion in GVA (21 percent of the total impact).
‘Collectively, these two regions are predicted to bear 85 percent of the total economic fallout,’ the researchers concluded.
Company-Specific Impacts
Jaguar Land Rover (JLR):
JLR, formerly Jaguar Land Rover, delivered almost 100,000 vehicles to the US market last year. All of these vehicles were imports, with the majority originating from UK factories, although some were sourced from other production facilities, such as the plant in Nitra, Slovakia.
David Bailey suggests that the tariffs could inflate the price of a new Range Rover in the United States by as much as $27,000, almost certainly leading to decreased sales volume.
A JLR spokesperson stated: ‘Our people are central to our operations. Our luxury brands remain exceptionally strong, and we will adapt to the new US trading conditions as they become effective.’
Aston Martin, Bentley, and Rolls-Royce:
The US represents the largest single market for prestigious British automotive brands such as Aston Martin and Bentley, with Bentley manufacturing its luxury cars at its Crewe facility.
North America constitutes Rolls-Royce Motor Cars’ largest sales region, accounting for approximately one-third of the 5,712 luxury models produced at its Goodwood plant in the preceding year.
McLaren:
McLaren, which exclusively produces supercars in Britain at its Woking production center, ships more vehicles to North America than any other global region, with nearly half of its total output destined for the US.
Mini (BMW Group):
BMW’s Plant Oxford, where Mini vehicles are manufactured for global distribution, including the American market, is also anticipated to be negatively affected by the imposition of these additional tariffs.
Manufacturers Less Exposed
Nissan’s Sunderland plant, which produces models like the Qashqai, Juke, and electric Leaf, and Toyota’s Burnaston facility are expected to experience less significant impacts from the 25 percent tariffs.
Both of these manufacturing sites primarily produce vehicles tailored for the European market, with the vast majority of their exports directed to the continent. For example, the Toyota Corolla models sold in America are manufactured at the company’s plant in Blue Springs, Mississippi.
Industry Response and Concerns
SMMT’s Mike Hawes commented last week: ‘If, as increasingly appears probable, additional tariffs are imposed on UK-made cars, it represents a setback for a long-standing and productive trade relationship.’
‘US consumers highly appreciate vehicles engineered in Britain by iconic brands, while conversely, numerous UK motorists purchase cars manufactured in America.’
‘Instead of implementing new tariffs, our collective effort should focus on fostering opportunities for both British and American manufacturers through a mutually advantageous partnership – ultimately benefiting consumers and promoting job creation and economic growth on both sides of the Atlantic.’
Potential Impact on US Car Prices: Expert View
Daniel Ives, global head of technology research at Wedbush Securities, suggests that the tariffs could inject ‘pure chaos’ into the global automotive industry, potentially increasing the price of a typical car for US consumers by $5,000 to $10,000.
He also forewarned that American car owners are highly likely to face increased repair costs for their domestically produced vehicles if they require parts imported from overseas.
‘We underscore that the idea of a US car manufacturer utilizing exclusively US-sourced parts is purely fictional and would take years to materialize,’ he stated.
‘Our conversations over the past week with numerous stakeholders in the automotive industry across the US, Europe, and Asia have led to the consensus view that this tariff announcement, in its current form, would throw the automotive sector into disarray and elevate the average price of vehicles by $5,000 on the lower end and $10,000 to $15,000 on the higher end.’
‘Ferrari has already announced post-April 1 price increases on certain models in direct response to the new tariffs.’
‘Every automaker globally will be compelled to raise prices to some extent for vehicles sold in the US, and the supply chain ramifications of this tariff announcement, reverberating globally, are currently difficult to fully comprehend.’
‘Low Blow’ to UK Car Sector: Further Analysis
Tom Jervis, consumer reporter at Auto Express, characterized the UK government’s apparent inability to secure a favorable trade agreement as another ‘low blow’ to the country’s struggling automotive industry.
‘Last year, cars valued at approximately £9 billion were imported into the States from the UK, representing about 15 percent of our total exports to the USA,’ he noted.
‘However, the implications of these tariffs extend beyond just the automotive sector. Studies have estimated that broad-based tariffs could result in a global reduction of UK exports by as much as 2.6 percent – seemingly a small figure, but in reality translating to tens of billions of pounds in losses.’
‘Ultimately, it is the blue-collar workforce and consumers who will bear the heaviest burden. Despite being a major export sector, UK automotive manufacturing is already contending with challenges stemming from stringent Zero Emission Vehicle mandates and heightened competition from international manufacturers, particularly those based in China.’
He further commented: ‘These tariffs imposed by the US could, in a worst-case scenario, lead to the closure of UK factories in favor of establishing new production facilities within the US, or, perhaps more likely, trigger hundreds or even thousands of job reductions as companies desperately seek to further reduce manufacturing costs.’
‘Either outcome will negatively impact the UK economy, ultimately resulting in a less prosperous situation for everyone.’
Potential for Reciprocal Tariffs and Price Increases for UK Consumers
Iain Reid, head of editorial at Carwow, also cautioned that consumers ‘rarely benefit’ from trade disputes of this scale, hinting at potential price increases for new cars in Britain if the UK government responds with similar levies on vehicles imported from the US.
‘Inevitably, there will be detrimental consequences at some point, either through the costs of tariffs being passed on to consumers, or through exporters implementing cost-cutting measures in their manufacturing countries.’
‘UK-based workers at Aston Martin, Bentley, Land Rover, and McLaren will be monitoring the situation closely, given that the US is a vital market for these prestigious brands.’
‘Meanwhile, UK consumers interested in purchasing Tesla vehicles could face price hikes if the UK retaliates.’
‘However, the impact is not limited to American brands. BMW and Mercedes-Benz operate significant manufacturing facilities in the US, meaning models such as the X3 and GLE could become 25 percent more expensive if the UK imposes import tariffs on US-built vehicles.’
‘With the UK already facing high living costs, a robust automotive industry is crucial to the broader economy. Let’s hope that this is merely political maneuvering and that a sensible trade agreement will ultimately be reached.’