As many as 25,000 UK automotive jobs are at risk following fresh warnings over impending US tariffs on vehicle imports, a leading think tank has said.
The Institute for Public Policy Research (IPPR) has highlighted that employees at key manufacturers, including Jaguar Land Rover and BMW’s Mini plant in Oxford, face the greatest exposure if the US presses ahead with its plans to introduce 25 per cent tariffs on car parts from May.
One in eight cars built in the UK are exported to the American market, and the IPPR has warned that such punitive levies could present an “extraordinary challenge” for the already fragile sector.
The think tank is urging the government and industry to intensify efforts to transition to electric vehicle production and invest in the emerging market for sustainable transportation — including green aircraft, trains and automotive technologies — as a way of mitigating the long-term risks.
“As one door closes, another opens,” said Pranesh Narayanan, a research fellow at the IPPR. “There is huge untapped potential in manufacturing green planes, trains and automobiles and selling them at home and abroad.”
Vehicle production and transport equipment currently account for a third of Britain’s manufacturing exports to the US. The looming tariffs form part of a broader wave of proposed “reciprocal” levies, with Washington reportedly planning to apply a blanket 20 per cent tariff on all UK goods.
The IPPR has called on policymakers — including the Labour Party — to support greener mobility by introducing grants for low-income households to access clean vehicles and slashing VAT on electric vehicle charging infrastructure. The think tank also recommends scrapping tariffs on battery imports to help ease the pressure on UK manufacturers.
Whitehall officials are reportedly engaged in last-ditch talks with their US counterparts to negotiate a possible exemption from the tariffs. The concern is that further strain on automotive and manufacturing exports could stifle Britain’s already modest economic growth.
The Office for Budget Responsibility (OBR) has warned that a 20 per cent tariff applied across all US trading partners could drag down UK GDP growth by 0.6 percentage points. Should these tariffs spark retaliatory measures from global trading partners, the hit to growth could reach 1 percentage point — effectively eliminating the Treasury’s projected £9.9 billion budget surplus by the end of the decade.
Meanwhile, new figures from the manufacturing sector show confidence is already waning. Business sentiment dropped to its lowest level in more than two years in March, with many firms citing tariff fears as a factor behind falling order volumes.
Emily Fry, senior economist at the Resolution Foundation, said the UK “won’t be immune from the impacts of supply chain disruptions and global growth headwinds” caused by escalating trade tensions.
She added: “A key opportunity for future economic growth lies in the UK using its existing strengths and capitalising on a global tailwind for more services trade. A new era of protectionism risks eroding that avenue for growth.”
