Trump slaps tariffs on imported cars: what it means for UK car buyers

“What we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” Trump announced in the Oval Office. “We start off with a 2.5% base, which is where we’re at, and go to 25%.”

The tariffs will take effect next week, on 2 April, with the US set to begin collecting them the following day. Trump claimed the measure would lead to “tremendous growth” for the domestic car industry, promising it would spur jobs and investment in the US.

While Trump called this “exciting news,” analysts warn the move is likely to disrupt car production, increase prices, and strain relations with key allies.

On 2 April – which he has labelled “Liberation Day” – Trump is expected to announce a broad range of reciprocal tariffs targeting imported goods that, according to his administration, are unfairly taxed by US trading partners.

Trump has long argued that the US is being exploited by other countries and that tariffs are the solution. However, his repeated delays and revisions to tariff proposals have fuelled market instability, triggering sharp sell-offs and raising concerns among businesses and consumers.

What are tariffs?

A tariff is a tax on imports imposed by the government and typically paid by the company importing the goods – in this context, cars. Tariffs are usually calculated as a percentage of the value of the imported goods. For example, a 25% tariff on a £20,000 imported car would add £5,000 to its cost.

While tariffs are meant to protect domestic businesses, consumers may end up paying more for cars if importers pass on the higher costs instead of absorbing them or reducing imports.

In recent weeks, US carmakers – including General Motors and Ford – have urged the president to exempt imported cars and vehicle parts from tariffs.

So, what does this mean for drivers in the UK?

Now that Trump has announced these tariffs, you could face price hikes on popular models from German brands such as BMW, Audi, and Mercedes-Benz, which rely heavily on sales in the US market.

According to Mike Thompson, COO at Leasing Options, these manufacturers may increase UK prices to offset losses from US tariffs. This could make premium vehicles less affordable for British car buyers.

Reshuffling global supply chains in response to tariffs may also affect availability. Manufacturers might prioritise markets with fewer trade barriers, meaning you could face shortages of certain models. For example, EVs like BMW’s i4 and iX could be redirected to regions with stronger demand or lower tariff concerns.

This poses a challenge for UK drivers, especially with the 2035 zero-emissions target and the upcoming ban on new petrol and diesel cars. Trump’s tariffs could also disrupt global production and supply chains, potentially making it harder for the UK to secure the electric cars needed to meet its Zero Emission Vehicle (ZEV) mandate and transition goals.

The industry has its say

Economists have raised red flags about Trump’s approach, warning that tariffs could drive up prices across the US. A study by automotive consultancy Anderson Economic Group found that blanket tariffs on Canada and Mexico could increase car prices by up to $12,000.

With major car exporters – including Mexico, Japan, South Korea, Canada, and Germany – potentially affected, the economic consequences could be far-reaching. However, White House official Will Scharf has argued that the tariffs could generate over $100bn in annual revenue for the US.

The new import taxes on cars will take effect on the same day as “reciprocal tariffs” for individual countries, which will vary based on their trade relationship with the US.

European commission president Ursula von der Leyen said the EU would study the latest announcement alongside other tariffs Trump has promised to unveil in the coming days.

“As I have said before, tariffs are taxes – bad for businesses, worse for consumers equally in the US and the EU,” she said. “The EU will continue to seek negotiated solutions while safeguarding its economic interests.”

Meanwhile, German economy minister Robert Habeck called for the EU to provide a “decisive response” to Trump’s latest tariff announcement, saying the levies “ultimately harm the US and the EU, and global trade as a whole.”

However, INEOS Automotive argued that the EU has neglected the tariff situation with the US, despite Trump’s clear intentions to implement tariffs, and that European leaders have failed to come to the table to negotiate a better solution.

“This is what happens when politicians sit on their hands,” said Lynn Calder, CEO of INEOS Automotive. “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.”

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), expressed disappointment over Trump’s announcement. He warned that additional tariffs on UK-made cars could harm the long-standing UK-US trade relationship, as US consumers enjoy British-built vehicles and UK drivers buy American-made cars.

Hawes urged British and American manufacturers to explore mutually beneficial opportunities that boost growth and jobs. He also called for both sides to negotiate a deal that works for all.

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