Automotive sector rattled by Trump tariffs

Due to come into effect on 2^nd April, the tariffs are the latest step in an accelerating trade war between the US and its partners and allies, and are expected to be followed by levies on a wide-range of other imported goods.

The announcement triggered an immediate fall in the share price of car makers around the world with Vauxhall maker Stellantis seeing a 6.4 per cent drop and the world’s biggest carmaker Toyota seeing a two per cent fall. Shares in US car makers have also taken a hit, with General Motors seeing a fall of 6.2 per cent and Ford losing 4.7 per cent.

Indeed, whilst president Trump has claimed that the tariffs will help revive the US automotive industry and lead to “tremendous growth” for the sector, most analysts and industry leaders are warning that the precise opposite will happen, and that the tariffs will dent US car production, drive up US car prices and impact jobs.

In total some eight million cars were imported into the US last year, accounting for approximately half of overall sales and the tariffs are expected to have a major impact on all of the US’s major trading partners, most notably Germany, South Korea, Mexico and Canada.  

And with few signs that the positive mood music of Keir Starmer’s February audience with Trump will be translated into a favourable trade deal, the tariffs could also be hugely damaging for the UK, for whom the US is the second largest car export market.   

According to figures from automotive trade body the SMMT, some 16.9 per cent of UK car exports were to the US last year (116,294 vehicles). It also represents the largest sales market for one of the UK’s most iconic automotive brands, Jaguar Land Rover.

Commenting on the latest situation SMMT CEO Mike Hawes said: “The UK and US auto industries have a long-standing and productive relationship, with US consumers enjoying vehicles built in Britain by some iconic brands, while thousands of UK motorists buy cars made in America. Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship… The industry urges both sides to come together immediately and strike a deal that works for all.”