**London**: Donald Trump’s new 25% tariff on all motor vehicle imports threatens UK jobs and the economy, impacting its £6.4 billion automotive exports to the US. Concerns grow as British politicians warn of risks and economic forecasts are halved amid ongoing negotiations with the US.
In a significant development for the UK automotive industry, Donald Trump has implemented a 25% tariff on all motor vehicle imports to the United States. This announcement, made yesterday, poses a potential threat to British jobs and the broader economy, particularly as the US is the largest market for UK vehicle exports.
The new tariff regime comes at a challenging time for the UK, following recent announcements from Rachel Reeves, the Chancellor of the Exchequer, who revealed substantial cuts to benefits aimed at addressing the budget deficit and increasing defence spending. The Office of Budget Responsibility has subsequently revised the UK’s economic growth forecast, halving it to two per cent.
The impact of these tariffs could be particularly severe for the UK’s car manufacturing sector, which exported approximately £6.4 billion worth of vehicles to the US in 2023, according to the Office of National Statistics. Andrew Griffith, the shadow trade secretary, expressed concern over the potential consequences, stating that British jobs are “clearly now at real risk”. He described Mr Trump’s decision as “concerning”, highlighting the vulnerability of the industry in the face of new global trade barriers.
In stark contrast, President Trump has framed the tariffs as a measure to foster domestic economic growth, insisting that the policy will encourage the establishment of new factories in the United States. “This will continue to spur growth,” he stated during a press conference. “We’ll effectively be charging a 25 per cent tariff,” he emphasised, declaring the move as a “permanent” directive.
The financial markets responded to the announcement with notable fluctuations. Shares of General Motors saw a decline of approximately three per cent in trading, while Ford’s stock experienced a minor increase. In contrast, shares for Stellantis, which owns Jeep and Chrysler, fell by around four per cent. This demonstrates the unease among investors regarding the implications of the new tariffs on the automotive sector.
Economist Mary Lovely from the Peterson Institute for International Economics commented on the likely repercussions of the tariffs, predicting that they would lead to significantly higher vehicle prices and reduced choices for consumers. She noted that the added financial burden from the tariffs would disproportionately affect middle and working-class households, potentially forcing them to hold onto older vehicles as new car prices continue to rise.
Ongoing discussions between the UK and US aimed at avoiding these tariffs have not yet yielded a resolution. Last week, Trade Secretary Jonathan Reynolds visited Washington to negotiate an “economic deal”, yet the timing of Trump’s announcement could undermine these efforts. Speculation has also arisen regarding the possibility of the UK reducing its digital services tax on tech giants to counteract the imposition of American tariffs, although Chancellor Reeves appeared to dismiss this approach in her remarks on Wednesday.
As the automotive industry braces for the potential fallout from these tariffs, the broader implications for the UK economy remain to be seen, especially in light of the current economic climate.
Source: Noah Wire Services
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