US President Donald Trump has labelled today (April 2) as “Liberation Day”, as he looks set to reveal the full extent of his plans for import tariffs. This is expected to include a 25% tariff on all US car imports, a move which is expected to put around 25,000 UK automotive jobs at risk.
When being sworn in for his second tenure as President back in January, Trump vowed to “tariff and tax foreign countries to enrich our citizens”. Since that date there has followed a plethora of tariff restrictions including:
- 1 Feb: Executive order to impose 10% tariff on all imports from China and 25% on imports from Canada and Mexico
- 13 Feb: Plan for “reciprocal tariffs” – to increase US tariffs to match tax rates other countries charge on imports
- 4 Mar: 25% tariff on imports from Mexico and Canada go into effect – Trump also doubled the tariff on all Chinese imports to 20%
- 5 Mar: One month exemption granted on new tariffs impacting goods from Mexico and Canada for US automakers
- 12 Mar: Tariffs on all steel and aluminium imports increased to 25%
- 13 Mar: Trump threatened 200% tariff on European wine, champagne and spirits
- 24 Mar: Trump warned he will impose a 25% tariff on all imports from any country that buys oil or gas from Venezuela
- 26 Mar: Trump said he is placing 25% tariffs on all imported cars ahead of 2 April – a day he called ‘liberation day”
The imminent tariff announcement is expected to be a “negative the world over”, according to European Central Bank President Christine Lagarde. A new report from the Institute for Public Policy Research (IPPR) has warned that over 25,000 jobs in the UK automotive sector could come under threat as a result of these tariffs which have huge potential to completely destabilise the UK car manufacturing industry.
Pranesh Narayan, Research Fellow at the think tank has stated that the only way to secure UK automotive manufacturing jobs is to: “Double down on making sure Britain is competitive in zero- or low emission-transport products.”
Jamie White, Managing Director at Exactaform, provider of PCD tooling to the likes of Airbus, Red Bull and BAE Systems added: “The introduction of tariffs will have a significant impact on the UK’s high-tech manufacturing industries, particularly aerospace and automotive. These sectors rely on precision-machined components where material costs and supply chain efficiency are critical. With aerospace manufacturers already managing complex global supply chains, any additional cost pressures could affect competitiveness and production lead times. For the automotive sector, where weight reduction is key for performance and efficiency, the increased cost of aluminium will make sourcing and manufacturing more challenging.
“As a cutting tool manufacturer supplying major aerospace and automotive firms, we are positioned right at the start of the supply chain, meaning we’ll see these changes take effect in real time. If tariffs result in increased material costs, we anticipate a ripple effect on machining strategies, tooling choices and overall production efficiency across the industry.”
It has been a period of enormous uncertainty for global trade not least because many are unsure of what the level of the Trump tariffs might be and which countries could be effected. US Secretary of the Treasury, Scott Bessent, has spoken about the “Dirty 15” countries who will likely be impacted but has not revealed who those 15 countries will be. However, the EU as a region is within the top 15 nations that have a trading surplus with the US. Speaking ahead of the tariffs announcement, Prime Minister, Sir Keir Starmer has stated that, “the UK is prepared for all eventualities.”
This uncertainty was a key contributing factor in this week’s PMI figures which revealed a deepening of the downturn of UK manufacturing as rates of contraction in output and new orders accelerated. Mike Thornton, Head of Industrials at RSM UK, said: “The headline PMI hit its lowest level since September 2023 falling to 44.9 in March – demonstrating the clearest signal that tariff uncertainty and trade wars are hampering manufacturing activity in the UK.
“Future output, new orders and new export orders all took a sharp decline in March highlighting that the uncertainty swirling around potential tariffs from the US or retaliatory action has led business to hit pause on purchases. It is hoped that this is temporary, and that confidence will start to improve later in the year, but this slowdown continues to negatively impact production, people and investment.”
James Brougham, Senior Economist for Make UK, said the Government must: “sit up exceptionally straight and pay attention to a rapidly deteriorating situation for manufacturers”.
“Unlike the last trough in activity that was induced by the acute pressures of the energy crisis, this is being driven predominately by a steady and consistent decline in new orders for the sector – highlighting both the retreat in demand for the UK sector’s goods compounded with the effects of global economic policy uncertainty and potential tariffs. This is an endemic challenge when compared to the woes of previous years.”
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