The recent imposition of US tariffs on imported goods has sent shockwaves through the global economy, with the UK’s motor manufacturing and logistics sectors poised to bear significant impacts. President Donald Trump’s administration has enforced a 10% tariff on all foreign goods entering the United States, with a steeper 25% duty specifically targeting car imports.
Immediate Industry Concerns
The UK’s automotive industry, a cornerstone of the nation’s manufacturing sector, faces substantial challenges due to these tariffs. The Society of Motor Manufacturers and Traders (SMMT) has expressed apprehension regarding barriers to trade with key partners. Mike Hawes, SMMT’s chief executive, emphasised the importance of preserving tariff-free and frictionless trade, noting that over half of the UK’s vehicle exports are destined for Europe, and approximately 70% of vehicles purchased in the UK originate from Europe.
The tariffs not only threaten the competitiveness of UK car exports but also pose risks to jobs within the sector. Analysts estimate that up to 25,000 jobs could be at risk due to the increased duties.
In response to the US measures, Business and Trade Secretary Jonathan Reynolds articulated the UK’s disappointment, stating, “We are focused on a pragmatic approach and are rapidly negotiating a wider economic agreement with the US to eliminate additional tariffs and to benefit UK businesses and our economy.”
He further assured that the government remains resolute in supporting UK industry and is working closely with affected companies. Prime Minister Keir Starmer acknowledged the adverse impact on the UK economy and has directed his team to enhance the UK’s economic resilience.
Chris Clowes, executive director at global supply chain and logistics consultancy, SCALA, said: “The 10% baseline tariff announced today is increasing pressure on already stretched global supply chains. The 25 per cent tariff on the automotive industry has already highlighted just how delicate and interconnected global supply chains really are, with US companies stockpiling ahead of the tariff’s implementation in the coming days. Components often cross multiple borders before a car even hits the showroom, meaning tariffs inevitably drive-up costs, not just for manufacturers but for suppliers and consumers worldwide.
“Businesses globally will now have to urgently rethink how and where they source products, redirect trade routes, and renegotiate contracts pretty much overnight. This is especially tough on smaller suppliers who are already working with tight margins and are now facing even more uncertainty and higher costs. Even big manufacturers are finding it tough; adjusting global supply chains isn’t quick or cheap and could lead to plant shutdowns, delayed deliveries, and higher prices at checkout.
“For the UK specifically, the stakes are higher than ever. While it’s not clear yet if the UK will secure any sort of trade agreement, the ripple effects from global tariff hikes are bound to impact the British economy significantly. There’s also a real risk the UK could see a flood of cheaper imports from countries like China, forcing the government to step in and protect key industries like pharmaceuticals, cars, and food production. Even if protective measures are taken, the UK isn’t entirely safe. The real challenge comes from broader global economic conditions, including lower demand and rising inflation, that these tariffs will only worsen.
“Today’s tariff announcement makes it clear that targeted and thoughtful trade negotiations are essential. Policymakers now have to carefully balance the goal of protecting domestic industries against the potential backlash from other countries, which could disrupt entire sectors and create even bigger economic headaches.”
The logistics sector, integral to the seamless movement of goods, is bracing for disruptions. Increased customs scrutiny and extended lead times are anticipated, placing additional burdens on hauliers, freight forwarders, and port operators. Logistics UK has underscored the necessity for close collaboration between the government and industry to ensure resilient supply chains. The organisation welcomed the government’s commitment to accelerating the delivery of critical transport and energy grid infrastructure, viewing it as a step towards optimising freight movement and bolstering economic growth.
Strategic Outlook
While the UK government is actively engaged in negotiations with the US to mitigate the impact of these tariffs, the situation underscores the importance of diversified trade links and robust domestic industrial capacity. The motor manufacturing and logistics sectors must navigate this evolving landscape by reassessing supply chain strategies and exploring alternative markets to maintain resilience.
The unfolding scenario serves as a stark reminder of the interconnectedness of global trade and the cascading effects that policy shifts can have on national economies. As the UK strives to position itself as a formidable independent trading nation post-Brexit, fostering strong international partnerships and reinforcing internal economic structures remain paramount.
Paul Holland, Managing Director for UK/ANZ Fleet at Corpay, including UK brands, Allstar and Keyfuels said: “President Donald Trump has now confirmed that new import taxes of 25% on vehicles entering the US will apply to the UK, with a 10% blanket tariff. This is set to have significant repercussions for UK fleet operators and the broader automotive industry.”
“It could increase vehicle acquisition costs, while it could also cause manufacturers to redirect vehicle supplies to other markets, which could affect fleet operators’ ability to procure specific vehicle models. Fluctuations in vehicle prices and market dynamics may impact the residual values of fleet vehicles, complicating financial planning and lease agreements.”
“Over the past five years, fleet operators have been challenged by Covid, Brexit and increasingly volatile trading conditions, all of which have made getting growth momentum very difficult. While the UK government is actively engaging in negotiations with the U.S., I hope these discussions take place at pace and lead to decisive action, limiting the impact on our nation’s businesses. My advice to UK fleets is to stay informed of ongoing trade negotiations and tariff developments to anticipate potential changes in vehicle pricing and availability. It is important to work with your partners to review and adjust plans and understand where efficiencies can be achieved to maintain operational efficiency in such turbulent times.”
