The UK automotive sector could be hammered by new tariffs from President Donald Trump, following a difficult year when overall vehicle manufacturing plummeted.
President Donald Trump has threatened fresh tariffs against the UK and other European countries in a bid to pressure nations into accepting a proposal for the United States to purchase the Danish territory of Greenland.
The President has been insistent on buying the autonomous territory for security benefits, with Trump criticising Denmark for not being willing to negotiate.
To put further pressure on European nations resistant to allowing Trump to take over Greenland, the President has resorted to introducing new measures.
Posting on social media site Truth Social, President Trump announced that the tariffs would begin at a rate of 10 per cent on February 1, 2026.
The 10 per cent tariff will be applied to any goods sent to the United States by Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland.
The tariff will increase to 25 per cent on June 1, 2026, unless a deal is reached for the "complete and total purchase of Greenland".
Experts are now warning that the UK manufacturing sector could face serious difficulties in the face of new tariff threats from the United States.
The UK's car production industry could be hammered by new tariffs introduced by President Donald Trump
|REUTERS/PA
Last June, Prime Minister Keir Starmer and President Trump announced a landmark trade deal designed to offset the impact of a 25 per cent tariff on auto imports to the US.
The UK saw car export tariffs drop from an effective rate of 27.5 per cent to just 10 per cent, which would apply to 100,000 cars exported to the US.
Speaking at the time, Sir Starmer said the "historic trade deal" would protect jobs across the country as part of Labour's Plan for Change.
"From today, our world-class automotive and aerospace industries will see tariffs slashed, safeguarding key industries that are vital to our economy," the Prime Minister added.
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President Donald Trump has consistently demanded that the United States buy Greenland
| REUTERSHowever, the new looming prospect of new tariffs could see manufacturers slapped with a 35 per cent tariff on any vehicle exported to the United States.
The US remains one of the biggest automotive trade partners to the UK, with just over 100,000 units exported to the US in 2024.
Pranesh Narayanan, a research fellow at the Institute for Public Policy Research (IPPR), warned that 25,000 jobs could be at risk in the automotive sector if the tariffs are confirmed.
He added: "With tariffs that could go up to 35 per cent, we are once again looking at a potentially massive drop in market share that threatens the viability of the big British manufacturers," The Telegraph reported.
The UK agreed a trade deal with the United States in June last year
| PAWhile full-year results for UK manufacturing have not yet been released, the latest data from the Society of Motor Manufacturers and Traders (SMMT) paint a stark picture.
Data from November shows that 710,298 vehicles were produced in the UK, a 16.7 per cent drop compared to the previous year.
November marked the fourth consecutive monthly decline in car production, with the massive cyber attack against Jaguar Land Rover having a significant impact on the figures.
JLR was forced to suspend manufacturing for a number of months after a cyber attack took its systems down, leading to a huge financial loss for the company and the UK economy.