Comment: Government's actions are a useful first step but needs to do more
It was more bad news for UK auto last week when President Donald Trump announced 25 per cent tariffs on all car imports to the US.
This will have a huge impact on the UK and EU auto industry which was already being squeezed by falling sales in China, stagnant demand in Europe and slow electric vehicle (EV) take-up. It's nothing short of a perfect storm for the auto industry.
Cars are the UK's number one goods export to the US, at £8.3 billion in the year to the end of quarter three in 2024, out of around £58 billion in total UK exports to the US.
Firms like JLR, Rolls Royce, Bentley, Aston Martin, Mini, McLaren and Morgan will be most affected. The US is the UK's largest auto export market after the EU.
There will be a particular impact on the West Midlands which is the number one exporting region to the US (think JLR and Aston Martin, for example).
Much of the UK auto industry is already operating well below capacity and the tariffs will be a further hit for a struggling industry. Production cuts and job losses are likely. The Institute For Public Policy Research puts 25,000 jobs at risk.
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That is a big underestimate as it fails to account for tipping points if plants fall below minimum viability levels and close completely, with a further impact on the supply chain.
You can double or triple that number in terms of the jobs at risk. The UK is looking to do a quick trade deal with the US to avoid tariffs hitting UK auto too much.
I think that is doable in a narrow sense on cars as the UK has a ten per cent tariff on US imports. Both sides could scrap auto tariffs completely and both would see it as a win. That has to be a key, immediate goal for the Government.
A broader trade deal to avoid Trump's ten per cent tariffs on all UK imports will be much more tricky and will see the US wanting concessions on the digital services tax, more access for US services to the UK in areas like health, and a deal on agriculture.
Think chlorinated chicken and hormone injected beef. The Government has already ruled out the latter.
To help the auto industry, Prime Minister Keir Starmer this week set out changes to the UK's Zero Emission Vehicle (ZEV) mandate.
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