US President Donald Trump has announced a new 25% tariff on all imported cars, threatening UK producers’ largest single export market.
Signing an executive order, Mr Trump said the tax would kick in on 2 April – what he has called “liberation day”.
This is when all his retaliatory import tariffs are supposed to take effect, but they have been delayed before.
The move ratchets up the global trade war Mr Trump himself kicked off at a time when his administration is battling the continued fallout from the Signalgate security breach in Washington.
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14:42
Impact of US tariffs on UK industry
Speaking late on Wednesday, Mr Trump said the proposal: “Will continue to spur growth. We’ll effectively be charging a 25% tariff.”
Similar duties on all car part imports are expected to follow in May, complicating the effects as even American car makers source components from around the world – meaning they could also face higher costs and lower sales.
There was swift condemnation of the latest threats, especially within countries worst affected in both volume and value terms including Mexico, Canada, South Korea and Germany.
The UK car industry also faces further damage from the tariffs at a time when it is already weakened by poor demand for new vehicles, domestically and abroad. Cheaper competition from China is also weighing heavily globally.
Manufacturers such as Jaguar Land Rover, Bentley, Aston Martin and Rolls-Royce stand to be worst affected.
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3:09
Ex-Aston boss fears tariff pain for UK firms
Official data shows that the US is the UK car sector’s largest single market by country, accounting for £6.4bn worth of car exports in 2023. That is 18.4% of the total.
Again, however, the UK government signalled it would not retaliate – mirroring its response to the tariffs on steel and aluminium imposed globally by the Trump administration earlier this month.
While chancellor Rachel Reeves condemned the fresh protectionism, she told Sky’s Wilfred Frost: “We’re not at the moment in a position where we want to do anything to escalate these trade wars.”
The remark will be seen as a nod to continuing UK trade deal talks with the US.
Listed European car and car parts manufacturers saw further steep declines in their share prices in Thursday trading as the plans drew widespread international criticism.
Canadian Prime Minister Mark Carney called it a “direct attack” on Canadian workers.
Even Trump advisor Elon Musk, the Tesla boss, admitted in a post on his X platform that the hit to his company would be “significant”.
During his second term, Mr Trump has used tariffs frequently as a trade weapon.
Image: Donald Trump announcing the 25% tariff on imported cars.
He cited plans from South Korean car maker Hyundai to build a $5.8bn (£4.5bn) steel plant in Louisiana as evidence the economic measures would bring back manufacturing jobs.
Even American and foreign firms already with domestic plants still rely on Canada, Mexico and other countries for parts and finished vehicles – meaning prices could increase and sales decline as new factories take time to build.
Tariffs are a key part of Mr Trump’s efforts to reshape global trade relations.
He plans to impose what he calls “reciprocal” taxes on 2 April that would match tariffs and sales taxes levied by other nations.
He has already placed a 20% tax on all imports from China.
Similarly, he placed 25% tariffs on Mexico and Canada, with a lower 10% tariff on Canadian energy products in addition to the duties on all steel and aluminium imports, including those from the UK.
Sky News understands the UK government is continuing to engage with the US on a trade deal and remains hopeful an agreement could be made before the tariffs come into force, but may retaliate if deemed necessary at a later date.
Mike Hawes, the chief executive of the UK car industry lobby group the SMMT, said: “Today’s announcement by President Trump is not surprising but, nevertheless, disappointing if, as seems likely, additional tariffs are to apply to UK made cars.
“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.
“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, benefitting consumers and creating jobs and growth across the Atlantic.
“The industry urges both sides to come together immediately and strike a deal that works for all.”
Lynn Calder, CEO of INEOS Automotive said: “This is what happens when politicians sit on their hands. As a growing EU-based automobile brand, we are vulnerable to tariffs, and we need our politicians to support our business, our jobs and our economies. We need urgent and direct political intervention on tariffs.
“Fortunately, we have been planning for tariffs but there is only so much we can do to protect US customers from price rises.”
With Vladimir Putin and Donald Trump’s meeting in Budapest “on hold” for now, US correspondents Martha Kelner and Mark Stone unpick the US president’s latest position on the war in Ukraine.
Martha also chats to Huffington Post journalist SV Dáte about his run-in with White House Press Secretary Karoline Leavitt.
As shows of diplomatic power go, this was a pretty good one. Here, in an industrial complex in the south of Israel that is rapidly being repurposed into a joint operations centre, America is taking centre stage.
A group walks in. At the centre is US Vice President JD Vance, flanked by omni-envoy Steve Witkoff and Jared Kushner, the president’s unofficial emissary to the Middle East and official son-in-law.
And as if to prove just how much heft there is on show, the fourth person to walk in is Admiral Brad Cooper, commander of the US’s Central Command, in charge of a bewildering number of troops and the most powerful foreign military leader in the Middle East. But in this company, he barely said a word.
Image: JD Vance. Pic: Reuters
Mr Vance was composed, enthusiastic and conciliatory. During our drive down to the complex, near the town of Kirya Gat, we had read the latest statement from Donald Trump, released on the social media platform that he owns, threatening swingeing repercussions against Hamas. “FAST, FURIOUS AND BRUTAL,” he had written.
So often the echo of the president’s words, Mr Vance struck a more nuanced tone. Yes, he said that Hamas could end up being “obliterated”, but he also offered the group some support. Since the ceasefire was signed, Hamas has repeatedly said that it cannot easily recover the bodies of all the dead hostages. Mr Vance agrees.
“This is difficult. This is not going to happen overnight,” he said. “Some of these hostages are buried under thousands of pounds of rubble. Some of the hostages, nobody even knows where they are.”
He said it would have been unwise to set a deadline, insisting “we’ve got to be a little bit flexible” and even accused Israel, along with Gulf Arab states, of “a certain amount of impatience with Hamas”.
Image: (L-R) JD Vance, US special envoy to the Middle East, Steve Witkoff, and Jared Kushner. Pic: Reuters
I asked him if his visit was as a direct result of Israel’s actions on Sunday, responding to the deaths of two soldiers with attacks that killed dozens of Palestinians.
No, said Mr Vance, it had “nothing to do with events in the past 48 hours”. Many will remain dubious – this is his first visit to Israel as vice president, and, if the timing really was coincidental, it was very fortuitous.
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2:50
Ceasefire in fragile state
Then I asked him about the future of Gaza, about whether there really could be no safeguards that Palestinians would have a significant role in the future of the enclave.
I didn’t expect a long answer – and I certainly didn’t expect him to start by saying “I don’t know the answer to that question” – but that’s what we got.
“I think that what is so cool, what’s so amazing about what these guys have done, is that we’re creating a governance structure that is very flexible to what happens on the ground in the future. We need to reconstitute Gaza. We need to reconstruct Gaza,” he said.
“We need to make sure that both the Palestinians living in Gaza but also the Israelis are able to live in some measure of security and stability. We’re doing all of those things simultaneously. And then I think once we’ve got to a point where both the Gazans and our Israeli friends can have some measure of security, then we’ll worry about what the long-term governance of Gaza is.”
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0:29
Trump says ceasefire still in place
While the words are different, and the tone is less didactic, the theme is familiar. The short-term gain is peace, while the long-term plan remains largely unaddressed and unformulated.
Work is being done on that front. Diplomatic sources tell me that the effort behind the scenes is now frenetic and wide-ranging, encompassing countries from across the region, but also way beyond.
But the questions they face are towering – who pays, who sets the rules, who enforces law, whose soldiers are the peacekeepers and what happens to all the displaced Gazans?
None of this will be easy.
Mr Vance, like Mr Trump, exudes confidence, and it has clearly inspired other leaders and their nations.
Few can doubt that Mr Trump’s iron-clad self-confidence has given life and momentum to this deal.
But that isn’t enough.
The diplomats, planners and, yes, the politicians have a lot to do.
Elon Musk has attacked NASA’s administrator – and claimed he isn’t smart enough to hold the top job.
The billionaire’s criticism of Sean Duffy came after the space agency said it was open to using moon landers that weren’t manufactured by his company SpaceX.
On X, Musk accused Mr Duffy of “trying to kill NASA”, and wrote: “The person responsible for America’s space program can’t have a 2 digit IQ.”
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2:16
Lift-off for SpaceX’s Starship!
While NASA has been planning to use SpaceX’s Starship rocket system to land on the lunar surface, proposals will now be accepted from rivals.
The agency wants to return astronauts to the moon within Donald Trump’s second term and do so before China gets there.
Mr Duffy had told CNBC: “We’re not going to wait for one company. We’re going to push this forward and win the second space race against the Chinese.”
While SpaceX has a $2.9bn (£2.2bn) contract for the Artemis III mission, it has fallen behind schedule – with Starship suffering a series of explosive failures this year.
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June: Empty SpaceX craft explodes
Nonetheless, Musk has defended the company’s progress, writing: “SpaceX is moving like lightning compared to the rest of the space industry.
“Moreover, Starship will end up doing the whole moon mission. Mark my words.”
In response, Mr Duffy said: “Love the passion. The race to the Moon is ON. Great companies shouldn’t be afraid of a challenge. When our innovators compete with each other, America wins!”
Mr Duffy is currently the acting administrator of NASA, but reports suggest that he wants to keep the role.
Musk has previously thrown his support behind a billionaire called Jared Isaacman for the top job, who has previously flown on two private SpaceX missions into orbit.