President Donald Trump’s 25% tariff on all imported cars, threatening UK producers in their largest single export market, has sparked a reaction from Chancellor Rachel Reeves
Chancellor Rachel Reeves has said the UK is in “intense negotiations at the moment with our US counterparts” as Donald Trump announced a new 25 per cent tariff on all imported cars.
The US leader’s latest threat against foreign-made products exported to the States has British producers in their largest single export market. If Trump follows through with the tariff, it will have a huge impact on the country’s car industry, including manufacturers such as Jaguar Land Rover, Aston Martin and Rolls-Royce.
Today, Ms Reeves said talks with the White House included “cars and steel and every other type of tariff”. She added: “That’s been ongoing since our Prime Minister, Keir Starmer, went to the White House to meet the US president just a few weeks ago. Those talks continue.”
Asked if the talks could lead to exemption for UK-based car companies, Ms Reeves replied: “Well, that’s what we’re working on. We’ve got a few more days left of those negotiations before these tariffs are due to come in.” The US is “rightly concerned about countries that run persistent, large trade surpluses with them” she added, but insisted the UK is “not one of those countries”.
She earlier said that unlike Canada, Mexico and China, UK is not planning “at the moment” to introduce retaliatory tariffs on the US after Trump said his latest tariffs would come into force on April 2. Shares in carmaker Aston Martin dropped sharply when stock markets opened this morning.
The firm, which is listed on the London Stock Exchange, saw its share price fall about 6 per cent shortly after opening. Ms Reeves said: “We’re not at the moment at a position where we want to do anything to escalate these trade wars. “Trade wars are no good for anyone. It will end up with higher prices for consumers, pushing up inflation after we’ve worked so hard to get a grip of inflation, and at the same time will make it harder for British companies to export.”
She went on: “We are looking to secure a better trading relationship with the United States. I recognise that the week ahead is important. There are further talks going on today, so let’s see where we get to in the next few days.” In another, the Chancellor said free trade is “good for both of our countries”. She added: “A million British people work for American firms. A million Americans work for British firms. Our two economies are so closely intertwined.”
Shadow chancellor Mel Stride said it is “very important” the UK has a trade deal with the US “that means we are protected from those tariffs”. He told ITV’s Good Morning Britain: “I think it’s a balance between we want to make sure that we have the right relationship with America on all sorts of levels, including security as well as economic, in order to make sure we get the very best for our country.”
The Liberal Democrats called on the Government to “toughen up” and start placing retaliatory tariffs on US carmakers like Tesla. The party’s deputy leader, Daisy Cooper, told BBC Radio 4’s Today programme: “I think there’s only one language that Donald Trump understands, and that is the language of strength.
“What we Liberal Democrats are very concerned about is that the Government strategy so far seems to be to cower in the corner and just ask Donald Trump to be nice to us, and just to hope that he doesn’t do anything nasty. That is not a strategy. So, we think the Government needs to toughen up. We think the Government needs to start preparing for retaliatory tariffs, and that those tariffs, that preparation, should start by looking at putting tariffs on Tesla cars, because clearly Elon Musk is a huge backer of Donald Trump, and that’s where we would start.”
Around four out of five cars made in the UK are exported. Figures from industry body the Society of Motor Manufacturers and Traders (SMMT) show the US is the second largest export market after the European Union for cars built in the UK. Some 16.9 per cent of UK car exports were to the US last year. The BBC reported that the US is the largest sales market for UK-based Jaguar Land.
Last year, the company sold 116,294 vehicles to the US, exceeding its sales in the UK and China. SMMT chief executive Mike Hawes said the announcement of tariffs was “not surprising but, nevertheless, disappointing” and urged both governments to strike a deal that avoids further damage. If, as seems likely, additional tariffs are to apply to UK-made cars, it’s a blow to a long-standing and productive relationship.”
The tariffs announced by the Trump administration could also create issues for US car firms. Many source their components from across the globe – meaning they could be faced with higher prices. At close of trading on Wednesday, shares in General Motors had fallen 3.1% while shares in Stellantis – the owner of Jeep and Chrysler – were 3.6 per cent down. Ford’s stock closed 0.1% higher.