President Trump has used the International Emergency Economic Powers Act of 1977 (IEEPA) to impose the tariff, which the White House said ‘includes an individualised reciprocal higher tariff on the countries with which the United States has the largest trade deficits’.
Whilst the UK looks set to face the baseline tariff of 10 percent a majority of US trading partners - including the EU which will face a tariff of 20 per cent - actually look set to be affected by much higher rates.
Trump is looking to revitalise manufacturing in the US and reduce the $1.2 trillion trade deficit reported in 2024.
“These tariffs seek to address the injustices of global trade, re-shore manufacturing, and drive economic growth for the American people,” said a statement from the White House. “The need to maintain a resilient domestic manufacturing capacity is particularly acute in advanced sectors like autos, shipbuilding, pharmaceuticals, transport equipment, technology products, machine tools, and basic and fabricated metals, where loss of capacity could permanently weaken U.S. competitiveness.”
Stephen Phipson, CEO of Make UK, said the 10 per cent tariffs on UK goods exported to the United States and 25 per cent tariffs on British made cars, steel and aluminium is devastating for UK manufacturing.
“Even without a formal preferential trade agreement, the UK and US have for decades enjoyed a balanced trade relationship, with mutual collaboration and investment that has helped job creation, growth and shared endeavour on both sides of the Atlantic,” he said. “It is highly disappointing that the strength of this relationship, at a time of where both countries need to boost shared growth, employment opportunities and innovation options, does not extend to enhancing free trade rather the reverse, the consequences of which will immediately harm the US consumer and economy too.”
He continued: “This isn’t the time for a trade war, we need to find a way to mitigate against these crippling tariffs at speed. UK manufacturing is already under significant pressure coping with huge rises in costs, uncompetitive energy prices and a skills crisis, adding this additional challenge will be very damaging for the sector and result in the loss of jobs.”
The Institute for Public Policy Research (IPPR) estimates that over 25,000 direct jobs in the car manufacturing industry alone could be at risk following Trump’s declaration.
Commenting, SMMT chief executive Mike Hawes said: “Our cars were already set to attract a punitive 25 per cent tariff overnight and other automotive products are now set to be impacted immediately.
“These tariff costs cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst UK producers may have to review output in the face of constrained demand. Trade discussions must continue at pace.”
In justifying its actions, the White House has published a list of tariffs imposed by countries outside of the US that are seen as damaging to US exports. These include a comparison of tariffs on ICE passenger vehicle imports, which stood at 2.5 per cent for the US but at 10 per cent and 70 per cent imposed by the EU and India respectively.
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