A dire warning for Britain's car industry: Donald Trump's actions have plunged carmakers into crisis once more. The automotive sector, already struggling, now faces a potential knockout blow with tariffs that could skyrocket to a staggering 35% by June.
Trump's recent announcement of a 10% tariff on goods from Britain and other European allies has sent shockwaves through the industry. Experts predict the automotive sector will bear the brunt of these new trade barriers.
For manufacturers, who had hoped Trump's global trade war was drawing to a close, this is devastating news. Britain's vehicle production had already hit a 75-year low in 2025, hampered by existing trade levies, weak domestic sales, and a cyber attack that crippled Jaguar Land Rover (JLR).
But the situation may yet worsen. The initial 10% levy, set to take effect on February 1st, could rise to a hefty 25% unless the UK and its European allies acquiesce to Trump's demand for control over Greenland.
This threatens to wreak havoc on the car industry, Britain's largest export to the US, totaling £10 billion in the last fiscal year. The impact could be severe, with the Institute for Public Policy Research (IPPR) warning that 25,000 jobs across the UK's automotive sector are at risk if Trump doesn't retreat.
Pranesh Narayanan, a research fellow at IPPR, highlights the potential ripple effect across the supply chain, stating, "It could completely destabilize the UK car manufacturing industry and jeopardize the government's growth plans."
Currently, carmakers face a 10% tariff on exports to the US, but Trump's threat of an additional 25% levy in June could push this to a staggering 35%. Narayanan adds, "With tariffs potentially reaching 35%, we're looking at a massive market share drop that could jeopardize the viability of our major British manufacturers."
Matthew Lyons of the University of Birmingham warns that if Trump doesn't back down from his most aggressive tariffs, Britain could face a multibillion-pound blow, potentially pushing the economy into recession.
Andy Palmer, former CEO of Aston Martin, emphasizes the inevitable impact of Trump's threatened taxes on JLR, Britain's largest carmaker. This comes just months after JLR was targeted by the most expensive cyber attack in British history, which halted production for months.
Palmer describes the situation as an "absolute black swan" for JLR, which relies heavily on the US market. He adds, "This is about using international trade as a weapon, which is not the purpose of a tariff. American customers will be paying tariffs to push Europe to support the transition of power from Denmark. It's bizarre when you think about it that way."
Palmer also dismisses the idea of shifting production to the US to escape tariffs, citing the impracticality of building new factories in such a short timeframe. Similarly, sending large numbers of cars to the US now to beat next month's levies is not a feasible option.
"There's no magic solution or alternative market," he says. "Most companies will likely try to keep a low profile, see how this plays out, and hope for the best."
However, while UK carmakers have managed to cope with the existing 10% tariff by sharing the burden with suppliers and US importers, another 10% hit is not feasible.
"Car companies can't absorb a tariff like this with their 4% profitability. You can't play it softly. So, the cost is passed on to the consumer, and when prices rise, some people simply can't afford it, and the volume will drop."
To avoid steep losses, JLR may opt to halt exports to the US during this latest tariff threat, as it did last year when faced with Trump's initial levies.
"They took the time to understand the situation and relied on the stock they already had in the US," Palmer explains. "The last thing you want is to ship a car across the Atlantic and then have the tax regime change. I'd consider doing that again if I were them, at least for a few weeks."
JLR and Mini have not yet responded to requests for comment.
But here's where it gets controversial... With Trump's tariffs potentially impacting the UK's economic growth and job security, how should the government respond? Should they negotiate with Trump, or is there another way forward?
And this is the part most people miss... The impact of these tariffs extends beyond the automotive sector. What other industries could be affected, and how might this shape Britain's future economic landscape?
Your thoughts are welcome in the comments!
