Tariffs are a ‘black swan event’ and ‘a debacle of epic proportions’ for the global auto industry, a leading analyst has warned.
The 25 per cent tax slapped overnight on foreign-made vehicles entering the US would cause ‘Armageddon’ and ‘pure chaos’ for the sector, driving car prices higher by up to $10,000 a vehicle, said Dan Ives at US broker Wedbush.
Such a move ‘throws the supply chain into pure panic mode’, costing the car industry £75billion a year – which will be passed directly on to consumers, he added.
The news is a hammer blow to the UK car industry, which relies heavily on exports.
The US is Britain’s second-largest car export market after the EU, with more than 101,000 mostly high-end vehicles shipped in 2024, worth £7.6billion and representing 16.9 per cent of all cars exported.
Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders trade body, said that the tariffs were ‘disappointing’ and added that further levies on UK-made cars were ‘likely’.
Tariff: Vehicles on the line at Nissan’s Sunderland plant. The US is Britain’s second-largest car export market after the EU, with more than 101,000 mostly high-end vehicles shipped in 2024
Carmakers’ shares slumped, with tycoon Elon Musk’s Tesla down 5.4 per cent yesterday.
Volkswagen, which owns Bentley, fell 4.4 per cent while Rolls-Royce-owner BMW was down another 3.6 per cent.
UK-based car manufacturers are assessing their options amid fears that they could cut their output across Britain to cope with slower demand, or scale back the number of vehicles that are shipped to the US.
Some 25,000 jobs are at risk in factories such as JLR’s Jaguar and Land Rover plants in the Midlands and BMW’s Mini factory in Oxford, according to the Institute for Public Policy Research.
The first victims of Trump’s tariff broadside came yesterday when Vauxhall-owner Stellantis said that it was temporarily laying off 900 workers at five of its facilities in the United States.
The maker of Chrysler cars and Jeep trucks is also pausing production at assembly plants in Mexico and Canada, sending its shares 8.1 per cent lower.
US President Donald Trump wants foreign companies to move production to the US to swerve tariffs.
But Wedbush analyst Ives said it would take three years to shift just 10 per cent of the auto supply chain to the US.
Such a move would cost hundreds of billions of dollars and cause ‘much complexity and disruption’, he added.
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