Chancellor Rachel Reeves has confirmed that the UK will not retaliate with tariffs on US goods after Donald Trump’s administration announced a 25% tax on all car imports. This move, expected to take effect on 2 April, aims to bolster US domestic manufacturing but has raised concerns about the potential economic impact on UK exports. Reeves acknowledged that the UK government is holding discussions with the US to mitigate the effects, emphasising the close economic ties between the two nations.
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The tariff will hit UK car exports particularly hard, as the US remains the UK’s largest export partner for vehicles. Premium British brands such as Jaguar Land Rover, Bentley, and Mini are likely to face substantial financial challenges due to the increased costs. According to the Office for National Statistics, nearly a fifth of UK car exports, worth £6.4bn in 2023, were sent to the US. Industry bodies such as the Society of Motor Manufacturers and Traders have called for swift negotiations to avoid long-term damage to the automotive sector.
European automakers have also felt the immediate effects of Trump’s tariff announcement, with shares in Aston Martin, BMW, and Volkswagen seeing declines shortly after the news. While pressure mounts for the UK to impose retaliatory tariffs, Reeves has firmly stated that escalating trade wars is not in the country’s interest. Instead, the UK government is focused on diplomatic efforts to secure a better trading relationship with the US, potentially before the tariffs take full effect.
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Despite hopes for a swift resolution, there are no guarantees that a trade deal will be finalised before the tariff deadline. Prime Minister Keir Starmer has engaged in talks with Trump, but details remain scarce. Both sides continue to negotiate, with some officials suggesting a narrower agreement focusing on technology and tariff relief rather than a full free trade deal. Nonetheless, with only days left before the tariffs take effect, uncertainty looms over the future of UK-US trade relations.
