Currently reading: UK and US in "intense" talks after Trump announces 25% car tariff

President claims new levy on all cars and car parts shipped into US will create "tremendous growth"

“Intense negotiations” are taking place between the UK and the US after president Donald Trump last night announced a new 25% tariff on all cars and car parts imported into the country.

The new levy will come into effect from 2 April and will apply to both finished cars shipped into the country and car parts imported for vehicles assembled there.

Speaking from the Oval Office late on Wednesday, Trump said "this is very exciting", adding: “What we’re going to be doing is a 25% tariff for all cars that are not made in the United States.”

On Thursday morning, UK chancellor Rachel Reeves told Sky News that the tariff risks hitting the UK economy by pushing up inflation. “Trade wars are no good for anyone,” she added.

"We are looking to secure a better trading relationship with the United States," said Reeves. "I recognise that the week ahead is important. There are further talks going on today so let's see where we get to in the next few days.”

The effect on the UK could stunt its economic growth, Office for Budget Responsibility chair Richard Hughes told the BBC. He added that it could hit government spending plans and fuel inflation if prices rose.

While the tariffs are bad news for companies that export foreign-built vehicles to the US, Trump claimed the move would lead to "tremendous growth" for the US automotive industry, adding that it would create more investment for US-based car makers and therefore more jobs.

Around eight million cars were imported into the US last year, around half the total sold in the market. Mexico will be the country hit hardest by the new levy. Car makers with production facilities in Mexico include BMW, Ford, Nissan, Volkswagen and Toyota. The US's other top importers are Canada, Germany, Japan and South Korea.

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Trump confirmed that the new laws were "permanent", quashing any notion that they would be reversed. But he stated that "if you build your car in the United States, there is no tariff".

The likes of BMW, Mercedes-Benz and Volkswagen already have plants in the US, building key models for both the US and other global markets. BMW's Spartanburg plant in South Carolina, for example, builds the X3, X4, X5, X6, X7 and XM. It will be affected, though, because it builds and imports the 3 Series from Mexico for the US market.

Some car firms have announced investment to expand or open new US facilities in recent months in an effort to spread production globally and avoid tariffs. The Hyundai Motor Group, for example, has invested more than £16 billion to increase its vehicle production in the country, including a new steel manufacturing plant.

The news will come as a big blow to the likes of JLR, for which the US is its biggest market with firm recording big increases in Range Rover and Defender sales in recent years. Mini, too, will be hit, given its models are made in the UK and China.

Other car makers targeting the US that don't have factories across the Atlantic include Cupra – although its models could be manufactured at other Volkswagen Group facilities in the US – and Lotus.

However, the move could also affect domestic US car makers and firms that currently manufacture vehicles there. GM, for example, manufactures a number of vehicles and car parts in Canada, China and Mexico that it then imports into the US, and those vehicles and parts would be hit by the tariffs.

The announcement has been dubbed "disappointing" by the Society of Motor Manufacturers and Traders.

Mike Hawes, the trade body's CEOcalled for UK and US representatives to "come together immediately and strike a deal that works for all".

He said: "The UK and US auto industries have a long-standing and productive relationship, with US consumers enjoying vehicles built in Britain by some iconic brands, while thousands of UK motorists buy cars made in America.

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"Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship, benefiting consumers and creating jobs and growth across the Atlantic."

European Commission president Ursula von der Leyen said the bloc will study the latest announcement. It itself launched heavy import tariffs on Chinese-made electric cars last year.

She said: "I deeply regret the US decision to impose tariffs on European automotive exports. 

"As I have said before, tariffs are taxes - bad for businesses, worse for consumers equally in the US and the European Union. 

"The automotive industry is a driver of innovation, competitiveness and high-quality jobs, through deeply integrated supply chains on both sides of the Atlantic.

"The EU will continue to seek negotiated solutions, while safeguarding its economic interests."

This new tariff is the latest in a wave of levies introduced by Trump since he took office for the second time. He said he wants to protect businesses and manufacturers in the US.

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Will Rimell

Will Rimell Autocar
Title: News editor

Will is Autocar's news editor.​ His focus is on setting Autocar's news agenda, interviewing top executives, reporting from car launches, and unearthing exclusives.

As part of his role, he also manages Autocar Business – the brand's B2B platform – and Haymarket's aftermarket publication CAT.

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scotty5 27 March 2025

There's only one thing I agreed with Trumpski during his 1st term and that was the inequality in tarriffs. As I understood it, we were charging higher import duties for American build cars than America paid to import ours. That was clearly wrong.

What's happened now ( or rather what's being proposed, as Trump has history of changing his mind ) is the tables have been turned, and we're having a piece of our own medicine.

So what's wrong with creating a level playing field? It's not as if it's going to benefit the USA any as their cars are 5hite anyway. The odd BMW gets built there, what else? Tesla ( or does ours come from the EU ? ).

The EU are in no position to complain. And I sincerely hope none of you remainers are complaining either? To protect their own home bred manufacturers, the EU just slapped increased import duties on Chinese cars! Talk about the pot calling the kettle black. Because we're no longer part of the EU, the UK were able to set our own duties on import fees and they remained the same, we haven't altered import duties from China.

It's a crazy old world. I know little about agreements between Canada, Mexico and the USA but as far as the this side of the pond is concerned, I kinda agree with Trump, but heavens above, I'd have been a bit more diplomatic about creating a level playing field.

Great negotiator? Only in his mind. He's nothing more than a glorified double glazing salesman.

How to solve it? Two solutions..

1: Create immediate turmoil. Trump proposing to impose import of car parts. Well why doesn't Canada Mexico etc just stop exporting them right now? Without parts, USA car manufacturing would grind to a halt. We don't need Canadian wood? OK then, stop wood exports tomorrow. We don't need Canadian steel and oil imports? OK, stop exporting steel and oil to the USA tomorrow. Lets see how the USA manages without them.

The reason USA builds imports cars and wood and steel is because it's cheaper. Produce it themselves and the USA has to invest in infrastructure and more expensive labour so obviously prices will increase for the American consumer.

And 2:

Sack every male world leader and replace them with women. Removing male ego's would go a long way to creating better relationships, becasue what all of this boils down to is, my peni5 is bigger than yours.

Peter Cavellini 27 March 2025
scotty5 wrote:

There's only one thing I agreed with Trumpski during his 1st term and that was the inequality in tarriffs. As I understood it, we were charging higher import duties for American build cars than America paid to import ours. That was clearly wrong.

What's happened now ( or rather what's being proposed, as Trump has history of changing his mind ) is the tables have been turned, and we're having a piece of our own medicine.

So what's wrong with creating a level playing field? It's not as if it's going to benefit the USA any as their cars are 5hite anyway. The odd BMW gets built there, what else? Tesla ( or does ours come from the EU ? ).

The EU are in no position to complain. And I sincerely hope none of you remainers are complaining either? To protect their own home bred manufacturers, the EU just slapped increased import duties on Chinese cars! Talk about the pot calling the kettle black. Because we're no longer part of the EU, the UK were able to set our own duties on import fees and they remained the same, we haven't altered import duties from China.

It's a crazy old world. I know little about agreements between Canada, Mexico and the USA but as far as the this side of the pond is concerned, I kinda agree with Trump, but heavens above, I'd have been a bit more diplomatic about creating a level playing field.

Great negotiator? Only in his mind. He's nothing more than a glorified double glazing salesman.

How to solve it? Two solutions..

1: Create immediate turmoil. Trump proposing to impose import of car parts. Well why doesn't Canada Mexico etc just stop exporting them right now? Without parts, USA car manufacturing would grind to a halt. We don't need Canadian wood? OK then, stop wood exports tomorrow. We don't need Canadian steel and oil imports? OK, stop exporting steel and oil to the USA tomorrow. Lets see how the USA manages without them.

The reason USA builds imports cars and wood and steel is because it's cheaper. Produce it themselves and the USA has to invest in infrastructure and more expensive labour so obviously prices will increase for the American consumer.

And 2:

Sack every male world leader and replace them with women. Removing male ego's would go a long way to creating better relationships, becasue what all of this boils down to is, my peni5 is bigger than yours.

I enjoyed reading your piece but your summing up in the last paragraph was a let down.

shiftright 30 March 2025

He has a point though. Way too many men-children in positions of power, so let's give the ladies more opportunities. God knows the men have been at it for thousands of years and spectacularly mucking it up more than half the time.

Varez 29 March 2025

Now if only Trump was consistent about the whole eye for an eye tariff that he's touting. I mean, Japan has zero percent tariff on all automobiles and *they* get the same 25% now (the current 2.5% was unfair enough). And then there's the NAFTA/USMCA countries...

artill 27 March 2025

No mention of the fact that currently cars coming from America pay more import tax than cars going the other way. I am not in favour of any tariffs, but i think Trump is getting the point over. As for suggesting American cars are too big for the UK, this hasnt stopped Tesla often being the No1 best selling car in the UK. But the European high fuel tax has cleared disadvanted US cars until Tesla came along. I dont think Trump can do anything to help the rest of us with that one

 

catnip 27 March 2025

I wonder if this will affect VW's decision to move all its Golf production to Mexico?

Varez 29 March 2025

Since it will no longer make financial sense to export many Mexican built VW to US, it will probably fasten the Golf move to Mexico. No use letting all that capacity go to waste. This may be the final nail for long suffering VW (brand, not the automaker) in US.