DONALD Trump has slapped a whopping 25 per cent tariff on all foreign-built cars in a huge blow to global car manufacturers.
The US President has said the car tariff, which will come into effect on April 2, will lead to a “tremendous growth in the auto industry”.
US President Donald Trump announces his tariff on auto imports in the Oval Office of the White House in Washington, DC[/caption]
Cars are the second-most valuable good exported to the United States from the UK – with £6.4 billion of vehicles being sent across the pond in 2023[/caption]
The US is one the biggest motor markets for many global car giants – including Japanese automakers Toyota, Honda, Nissan, Mazda and Subaru – who will now be hit hard.
This also includes the UK, which exported £6.4 billion worth of cars to the US in 2023 – accounting for 18.4 per cent of all the UK’s car exports.
Jaguar Land Rover has a particularly high US export market, selling more than 100,000 vehicles there every year.
Making the announcement, Trump said from inside the Oval Office: “This is the beginning of Liberation Day in America.
“If you build your car in the United States, there will be no tariff.”
Asked if there was anything carmakers could do to have the tariffs removed, Trump replied: “This is permanent, 100 per cent.”
Trump has extended his punishing trade war to now impact the entire world as fears grow for key UK industries.
Tariffs are taxes charged on goods imported from other countries, and are typically put in place to make domestic products more competitive.
It means any company wishing to sell UK-produced cars in the US will have to pay a 25 per cent charge on top of the cost of the vehicle it’s importing.
Some, if not all, of this cost may be pushed onto the consumer, meaning prices go up for the imported motors, making US-made vehicles seem comparatively cheaper.
The White House expects the tariffs to raise $100 billion in revenue each year, although there are fears of a financial squeeze on automakers who depend on global supply chains.
Many American carmakers source their components from around the world, and it could mean they face higher costs and lower sales.
President Trump has argued, however, that the tariffs would lead to more factories opening inside the US as company’s would look for ways to avoid the tax.
However, there are concerns of how this will impact consumers in America as well as manufacturers across the world.
Economist Mary Lovely, senior fellow at the Peterson Institute for International Economics has warned vehicles prices will rise as a result of the tariff.
She said more households could find themselves priced out of the new car market, where prices already average $49,000.
As well as having to hold on to ageing vehicles, US consumers are likely to see the average price of a motor jump up by as much as $12,500, if the tax is passed on in full to buyers.
The US president also previously announced 25 per cent tariffs on all steel and aluminium imports coming into the US – with the EU already hitting back hard.
Trump’s tariffs are now set to have a huge impact on the UK steel industry.
They have already warned that the decision to impose a transatlantic trade war “couldn’t come at a worse time”.
The UK Business Secretary has described the decision to impose global tariffs on steel and aluminium as “disappointing”.
President Trump has argued the tariff will encourage manufacturers to open new factories in the US[/caption]
One expert has warned that vehicle prices will become ‘much higher’ in America, with the average cost expected to rise by as much as $12,500[/caption]
Major motor companies around the world, such as Toyota, are expected to be hit hard by the tariff[/caption]
Jonathan Reynolds added that “all options” are on the table to respond in the national interest.
The British government has already said they don’t want to retaliate and would rather come to an amicable solution.
Chancellor Rachel Reeves announced last week that tit-for-tat tariffs only risk slowing down the whole global economy.
She said she didn’t think tariffs “serve anyone well”.
Adding, “We don’t want to see tariffs. I will continue to make the case with all my international counterparts for free and open trade.”
Despite the UK staying firm in their hopes for a peaceful resolution, the European Union has already announced a huge two-stage retaliation against the US, which will cover €26 billion in EU exports.
From April 1, the European Commission says it will reimpose tariffs in response to Trump’s global tariffs.
This will have a direct impact on many iconic American brands, such as Harley-Davidson.
Then, from mid-April, further countermeasures will be applied if EU member states all approve.
European Commission President Ursula von der Leyen said today: “We deeply regret this measure.
“Tariffs are taxes. They are bad for business and even worse for consumers.
“These tariffs are disrupting supply chains. They bring uncertainty to the economy.
“Jobs are at stake. Prices will go up. In Europe and in the United States.
“The European Union must act to protect consumers and business.”
They added that any decision can always be reversed if the Trump administration is ready to “find a negotiated solution”.
The new tariff comes just weeks after Trump imposed a 25 per cent charge on the import of steel and aluminium into the US[/caption]
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