Donald Trump's 25 per cent tariffs on US car imports from Wednesday could put 25,000 UK jobs in the automotive manufacturing sector at risk, a think tank has warned.
The Institute for Public Policy Research (IPPR) said the US President's levies on UK-made cars entering the United States - which could make Range Rovers almost $30,000 pricier when sold in the country - would put 'extreme pressure' on Britain's car makers and 'threaten jobs and economic growth'.
With exports to America predicted to fall with Trump's 'reciprocal' tariffs on 'friends and foes', the IPPR says employees at Jaguar Land Rover and the Cowley Mini factory will be among the most exposed.
Eight in ten motors produced in Britain are exported. And three quarters of the 603,565 cars built for overseas markets in 2024 were made for just three regions - one of these being the US.
While the EU accounted for 54 per cent of exports and China 6.6 per cent, some 16.9 per cent were destined for US ports.
It means some 102,000 cars - estimated to be worth £9billion - that came off British assembly lines ended up in the US last year. That accounts for one in eight (13 per cent) of all passenger cars made here in 2024.
Pranesh Narayanan, research fellow at IPPR, said: 'Trump's tariffs have huge potential to completely destabilise the UK car manufacturing industry, affecting tens of thousands of jobs and putting the government's growth plans at jeopardy.'
Researchers at the University of Birmingham warned the West Midlands - home to Jaguar Land Rover and Aston Martin - will be hit hardest: 'The impact of a decision made an ocean away specifically on the West Midlands cannot be understated. Rather than a shock, the West Midlands automotive sector could face a sudden and catastrophic earthquake,' it said.
Donald Trump's 25% tariffs on US car imports from Wednesday could put 25,000 UK jobs in the automotive manufacturing sector at risk, a think tank has warned today
The US President is today expected to make good on his promise to slap 25 per cent tariffs on all foreign-made motors arriving in the US in a bid to spur domestic business and protect jobs.
Keir Starmer admitted on Tuesday that the UK won't be spared, saying pleas for an exemption had failed.
The PM acknowledged the 'likelihood' that Britain will face hugely damaging levies on exports to the US on the president's so-called 'Liberation Day'.
Chancellor Rachel Reeves has also told Cabinet that there will be a major economic hit - not least on car makers.
Experts have estimated that the price of British cars sold in America will rise by thousands of dollars on Trump's action - and could threaten demand for UK-made motor vehicles on the other side of the Atlantic, increasing the risk to British jobs.
Some 16.9% of the 603,595 cars produced for export last year - accounting for 102k units - were shipped to the US
According to the Society of Motor Manufacturers and Traders, the automotive manufacturing industry employs some 198,000 people directly and 813,000 in total across the wider sector.
Reacting to last week's news of Trump's proposed 25 per cent car tariffs, SMMT chief exec Mike Hawes said it was 'not surprising but, nevertheless, disappointing'.
His comment came within moments of the trade body confirming that UK motor production had slumped for a 12th month in a row in February as the total output of cars and vans had dropped by 11.6 per cent to 82,178 units in the month.
Professor of Business Economics at the Birmingham Business School, David Bailey, described the situation to Auto Express as a 'perfect storm' for British car making.
He said it will have a 'big impact' on manufacturers in the UK and Europe who are 'already being squeezed by falling sales in China, stagnant demand, and slow EV take up'.
US president Donald Trump has christened April 2 'Liberation Day', vowing to impose tariffs on imports from around the world - including 25% levies on cars
A number of UK car makers are likely to feel the brunt of Trump's 25 tariffs.
However, Dr Matt Lyons and Dr Huanjia Ma, research fellows at City-Region Economic Development Institute at the University of Birmingham, calculated it is likely to have the biggest impact on automotive manufacturers in the West Midlands.
Its own study estimates the cost of the US tariffs to the UK will be £9.8billion in GDP between 2025 and 2030, putting 137,000 jobs at risk.
'According to our analysis, the West Midlands, an important hub for automotive manufacturers and their supply chain, is expected to take the sizeable brunt of this, losing £6.2billion in GDP, 62 per cent of the total impact on the UK,' they said.
'The West Midlands is home to Jaguar Land Rover, Aston Martin, Changan Automotive and a large cluster of suppliers. In a 2023 study, 22 of the 50 largest automotive firms in the region were already found to be at risk of insolvency due to poor liquidity ratios.'
It said that the West Midlands is projected to suffer a £6.2billion decline in GDP (62 per cent of the total impact) and £4.6billion loss in gross value added (GVA).
The North West is anticipated to lose £2.1billion in GDP and £1.8billion in GVA (21 per cent of the total).
'Together, these two regions will see 85 per cent of the economic impact,' they concluded.
JLR (formerly Jaguar Land Rover) delivered almost 100,000 cars to the US last year from various manufacturing destinations
Every JLR car sold in the US was imported and the majority come from UK factories (like the Halewood plant in Liverpool pictured) - though some from its other production locations including Nitra, Slovakia
North America is Rolls-Royce Motor Cars' largest sales region of all
US deliveries accounted for around a third of the 5,712 luxury models Rolls-Royce produced at its Goodwood facility last year
JLR (formerly Jaguar Land Rover) delivered almost 100,000 cars to the US last year - all of them imported and the majority from UK factories - though some from other locations including the Nitra plant in Slovakia.
David Bailey says the tariffs could add as much as $27,000 to the price of a new Range Rover in the United States - almost certainly having a negative impact on sales.
'Our people are the heart of our business. Our luxury brands have never been stronger and we will address the new US trading terms when they come into force,' a JLR spokesperson told This is Money.
The US is also the biggest market for British prestige motor brands Aston Martin and Bentley, the latter producing luxury cars in Crewe.
North America is Rolls-Royce Motor Cars' largest sales region, accounting for around a third of the 5,712 luxury models it produced at its Goodwood facility last year.
McLaren - which exclusively makes supercars in Britain at its production centre in Woking - delivers more cars to North America than anywhere else globally, with almost half of its outputs shipped to the US.
BMW's Plant Oxford, where Minis are produced for global markets including America, will also likely take a hit from the additional tariffs.
The US is also the biggest market for British sports car maker, Aston Martin
Bentley, which produces cars at its Crewe factory, sells most of its cars in the Americas too
McLaren - which exclusively makes supercars in Britain at its production centre in Woking - delivers more cars to North America than anywhere else globally
Mini's Cowley factory in Oxford, which produces cars for the US market, will also likely take a hit from the additional tariffs
Nissan's Sunderland plant, home to the Qashqai, Juke and electric Leaf, and Toyota Burnaston will feel less of the burden of Trump's 25 per cent tariffs.
Both manufacturing plants predominantly produce European-spec cars, with the vast majority exported to the continent. The Toyota Corolla sold in America, for instance, is made in Blue Springs, Mississippi.
SMMT's Mike Hawes said last week: 'If, as seems likely, additional tariffs are to apply to UK-made cars, it's a blow to a long-standing and productive relationship.
'US consumers enjoy vehicles built in Britain by some iconic brands, while thousands of UK motorists buy cars made in America.
'Rather than imposing new tariffs, we should be creating opportunities for both British and American manufacturers as part of a mutually beneficial relationship – benefiting consumers and creating jobs and growth on both sides of the Atlantic.'
Daniel Ives, global head of technology research at Wedbush Securities says the tariffs will cause 'pure chaos' to the global auto industry, raising the prices of a typical car to a US consumer by $5k to $10k.
He also warned that drivers in America are extremely likely to incur increased repair bills for their US-produced cars that require parts imported from overseas.
'We stress that the concept of a US car maker with parts all from the US is a fictional tale that does not exist and would take years to make this concept a reality,' he said.
'Over the last week, we have spoken to many in the auto industry from around the US, Europe, and Asia and the conclusion is this tariff announcement (in its current form) would send the auto industry into upside down mode and raise the average price of cars between $5k on the low end and $10k to $15k on the high end.
'Ferrari already said after April 1 it will raise prices on certain models in response to the new tariff.
'Every auto maker in the world will have to raise prices in some form selling into the US and the supply chain logistics of this tariff announcement heard around the world is hard to even put our arms around at this moment.'
Tom Jervis, consumer reporter at Auto Express, said the UK government's failure to 'carve out a deal' would mark yet another 'low blow' to the nation's struggling car industry.
'Last year, roughly £9billion worth of cars were imported to the States from the UK, which accounts for around 15 per cent of all of our exports to the USA,' he said.
'However, tariffs go beyond just the automotive industry as studies have estimated blanket tariffs could see global UK exports fall by as much as 2.6 per cent – that may seem like a small figure, but we're talking about losses of tens of billions of pounds.
'Ultimately, however, it's the blue-collar worker and consumer that will be affected the most; despite being our biggest export, the UK automotive manufacturing sector is already struggling due to fallout from the tough Zero Emission Vehicle mandate and increased competition from abroad – particularly from China.'
He added: 'These tariffs from Trump could, in a very worse-case scenario, see UK factories close in favour of new facilities being opened up in the US, or perhaps more likely, instigate hundreds or even thousands of job losses as firms scramble to cut manufacturing costs further.
'Either way, this will also impact the UK economy, meaning that everyone will be worse off as a result.'
UK's struggling car makers: The trade body confirmed last week that production had slumped for a 12th month in a row in February as the total output of cars and vans dropped 11.6%
Reacting to last week's news of Trump's 25% tariffs on imported cars, SMMT chief exec Mike Hawes (pictured) said it was 'not surprising but, nevertheless, disappointing'
Head of editorial at Carwow, Iain Reid, also warned that consumers 'rarely win' in trade wars of this magnitude, hinting at potential increases to new car prices in Britain if the UK Government imposes similar levies of vehicles moving in the opposite direction.
'There will be losers at some point, either from the cost of tariffs being passed on to buyers, or from exporter cutting costs in the country where the cars are made.
'UK workers at Aston Martin, Bentley, Land Rover, and McLaren will be watching closely, as the US is a key market for those brands.
'Meanwhile, Tesla buyers here could see prices jump up if the UK hits back.
'But, it's not just American brands who'll be impacted – BMW and Mercedes have big manufacturing plants in the US, meaning models like the X3 and GLE could get 25 per cent pricier if we apply import tariffs from US-built cars.
'With UK living costs already high, a strong car industry matters to the wider economy. Let's hope this is just political posturing before a sensible deal is struck.'
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