The recent imposition of tariffs by US President Donald Trump has sent shockwaves through UK businesses, particularly in the automotive and manufacturing sectors. With tariffs reaching as high as 25% on car exports and 10% on various goods, UK Prime Minister Keir Starmer has vowed to support affected industries and seek a trade deal to mitigate the fallout.
Key takeaways
- Trump’s tariffs include a 10% baseline duty on UK imports and a 25% tariff on car exports.
- Jaguar Land Rover has paused shipments to the US in response to the new tariffs.
- Starmer plans to use state intervention to protect British businesses from the economic impact.
- The UK government is consulting with businesses to formulate a response to the tariffs.
The impact of tariffs on UK businesses
The tariffs, which came into effect on April 9, 2025, have raised concerns about a potential recession, with JP Morgan estimating a 60% chance of global economic downturn. The automotive sector, particularly, has been hit hard, with Jaguar Land Rover announcing a suspension of all shipments to the US due to the 25% tariff on car imports. This decision affects a significant portion of the company’s sales, as the US market accounts for nearly a quarter of its revenue.
In addition to the automotive industry, other sectors such as steel, aluminium, and pharmaceuticals are also facing increased costs and uncertainty. The UK exported nearly £60 billion worth of goods to the US last year, making the stakes particularly high for British businesses.
Government response and support measures
In light of these challenges, Prime Minister Starmer has pledged to back British businesses “to the hilt.” He has indicated that the government is prepared to intervene directly in the market to protect jobs and support industries most affected by the tariffs. Key measures being considered include:
- Emergency reforms to reduce regulatory burdens on businesses.
- Targeted tax breaks for struggling sectors.
- Investment in domestic competitiveness to lessen reliance on global markets.
Starmer has also emphasised the importance of maintaining free trade principles, despite the protectionist measures being adopted by the US. He stated, "We cannot cling to old sentiments when the world is turning this fast," highlighting the need for a proactive approach to trade and economic policy.
Ongoing negotiations and future outlook
The UK government is currently engaged in negotiations with the Trump administration, aiming to secure a trade deal that could exempt the UK from some of the tariffs or reduce their impact. Starmer has expressed optimism about these discussions, stating that all options remain on the table.
As the situation develops, the UK is also exploring ways to strengthen trade ties with other nations to mitigate the impact of US tariffs. This includes potential agreements with countries in the EU and beyond, as the government seeks to position the UK as a global champion of free trade.
Conclusion
The imposition of Trump’s tariffs marks a significant challenge for UK businesses, particularly in the automotive and manufacturing sectors. With the government pledging support and actively seeking a trade deal, the coming weeks will be crucial in determining how effectively the UK can navigate this turbulent economic landscape. As businesses brace for the impact, the focus remains on finding solutions that protect jobs and sustain economic growth in the face of global trade tensions.
Sources:
- Starmer vows to protect UK businesses from tariff ‘storm’, BBC.
- UK and EU stock markets slump as Trump’s tariffs, including 104% on China, take effect – business live |
Trump tariffs, The Guardian. - Starmer vows to back British business ‘to the hilt’ amid Trump tariff fallout, The Independent.
- Trump rips up rulebook on trade and businesses are left reeling, BBC.
- I’ll shelter British business from storm of Trump’s trade war, The Telegraph.
