How will UK carmakers be hit by Trump import tariffs?

How will UK carmakers be hit by Trump import tariffs? — key developments

The US is the second largest export market for the UK car industry, after the EU

Fri, Mar 28, 2025, 9:39 AM 4 min read

Starmer seeks deal with US to avoid trade war after Trump’s car tariff blow

WASHINGTON DC, USA - 27 February 2025 - US President Donald Trump and UK Prime Minister Keir Starmer meet at The White House, Washington DC, USA on Th — Keir Starmer said the UK would continue 'intense discussions' with the US on closer trade ties after Donald Trump announced 25% import tariffs on cars. · Geopix

Trump’s decision to slap a 25% import tax on cars is “very concerning” but the UK will not be “jumping into a trade war” with America, Starmer has said.

The tariff on vehicles imported to the US will come into effect on 2 April in a blow to the UK automotive industry.

The prime minister said the UK would continue “intense discussions” with the US on closer trade ties, including measures to ease tariffs, but stressed that all options remained on the table if talks failed.

Read more about UK efforts to strike a deal to avoid US tariffs from PA Media

Which UK carmakers will be hit hardest by Trump’s latest import tariffs

ST ATHAN, UNITED KINGDOM - FEBRUARY 21: Aston Martin's first SUV the Aston Martin DBX is seen at the new factory in St Athan, Wales on February 21, 2020 in United Kingdom. (Photo by Chris Jackson/Getty Images) — Aston Martin are among that brands that could be impacted by US tariffs on automotive imports. · Chris Jackson via Getty Images

The UK’s automotive sector describes itself as “the engine room of Britain’s international trade”, boasting that it generates “£1 in every £8 the UK earns from exporting goods”.

But the UK’s carmakers — including Tata Motors (TATAMOTORS.NS)-owned Jaguar Land Rover, the BMW (BMW.DE)-owned Rolls-Royce and Mini, and Aston Martin (AML.L) — are weighing up the potential impact of Trump’s planned 25% tariffs on cars imported into the US. The new levies on cars and light trucks are due to take effect on 3 April.

Of the nearly 780,000 cars produced in Britain in 2024, eight in 10 were destined for overseas, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Of the vehicles produced for international markets, almost 80% — representing 467,937 units — were exported to the top three markets: the EU, the US and China.

Read the full story on the UK's car industry from The Guardian

UK has to take ‘different approach’ in talks on US tariffs – minister

LONDON, ENGLAND - MARCH 26: British Chief Secretary to the Treasury Darren Jones arrives for a weekly cabinet meeting at 10 Downing Street on March 26, 2025 in London, England. (Photo by Peter Nicholls/Getty Images) — Darren Jones said there was 'no easy answer' when it came to negotiating tariffs. · Peter Nicholls via Getty Images

The UK has to take a “different approach” to other countries when it comes to negotiating tariffs with the US, a Treasury minister has suggested.

Darren Jones said “there is no easy answer” and there are “complicated issues” to be discussed.

A 25% tax on cars imported into the US will come into effect on 2 April, Donald Trump has announced, in a blow to the UK automotive industry.

Read more on how the UK plans to approach trade talks from PA Media

UK car output dips as Trump auto tariffs loom

Aerial view Longbridge car factory in Birmingham, West Midlands, Uk — Longbridge car factory in Birmingham, West Midlands. · Dave Bagnall Archive

Production of cars and commercial vehicles saw an alarming 11.6% decline in February, according to new data from the Society of Motor Manufacturers and Traders (SMMT).

Just 82,178 vehicles were produced — a drop of 10,787 from February 2024 — in the 12th consecutive month of falling auto manufacturing output.

There was a particular decline in manufacturing for the home market, with a 22.3% plunge in vehicles manufactured to be sold in the UK market — down to 18,401.

Read more on the impact Trump's tariffs are already having on the sector from CityAM

Car makers trail US high-grade market with levies set to hit

US flags fly outside a car dealership in Alhambra, California, on March 27, 2025. Automakers were battered on March 27 as stock markets fell on both sides of the Atlantic after US President Donald Trump announced significant tariffs on imported vehicles and parts, pressing ahead with tough trade policies many fear will spark a recession. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images) — US flags fly outside a car dealership in Alhambra, California. · FREDERIC J. BROWN via Getty Images

Automakers’ bonds weakened in US debt markets on Thursday after Trump slapped 25% tariffs on car imports and warned of a broader trade war ahead.

Risk premiums, or the extra yield over Treasuries that investors demand, rose on recently issued notes from US units of Volkswagen AG (VOW3.DE) and BMW AG (BMW.DE). For example 5.35% Volkswagen notes due 2030, sold just last week, widened by 0.24 percentage points to 1.35 percentage points. The broader market is on track to weaken by less than a basis point.

Concerns about tariffs are weighing on new bond sales as well. In the junk bond market, French auto supplier Forvia SE (FRVIA.PA) is boosting the yield on its first US dollar offering to draw in sellers.

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