The UK government has confirmed it is not currently planning retaliatory tariffs against the United States following the Trump administration’s decision to impose a 25% tariff on car imports. Chancellor Rachel Reeves made the statement in response to the new trade measure, which is set to take effect on April 2.
In a conversation with Sky News, Reeves emphasized that the UK is not seeking to escalate the situation, noting the harmful effects of trade wars on consumers and businesses. “Trade wars benefit no one,” she remarked, warning that such conflicts lead to higher prices for consumers, potentially worsening inflation at a time when the UK is working to stabilize its economy. She also highlighted the adverse impact on British companies looking to export their goods.
Reeves reiterated the UK’s goal of securing a better trade relationship with the US, acknowledging the significance of upcoming talks. “We are aiming for a more productive trading environment with the United States,” she added. “There are discussions taking place, and we’ll see where we stand in the coming days.”
The Chancellor also underscored the strong economic ties between the two nations, stating, “A million British workers are employed by American companies, and a million Americans work for British firms. Our economies are deeply interconnected.”
In contrast, opposition voices have urged the government to take a firmer stance. Shadow Chancellor Mel Stride expressed the importance of negotiating a trade deal with the US that ensures protection against tariffs, stressing the need for a balanced relationship that benefits both security and economic interests.
Meanwhile, the Liberal Democrats have called for a more assertive response from the UK government. Deputy leader Daisy Cooper argued that the UK should prepare for retaliatory tariffs, particularly targeting major US car manufacturers like Tesla. Speaking on BBC Radio 4, she criticized the government’s current strategy as weak, suggesting that the UK should begin by imposing tariffs on Tesla vehicles, given CEO Elon Musk’s political ties to Donald Trump.
The UK car industry, which exports approximately 80% of its vehicles, faces significant challenges as the US remains the second-largest export market for British-made cars. In 2024, 16.9% of UK car exports were directed to the US, with Jaguar Land Rover seeing strong sales in the country. Last year, the company sold more cars in the US than in the UK and China combined.
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), expressed disappointment over the tariff announcement, describing it as a setback in the long-standing UK-US trade relationship. He called for both governments to negotiate a deal to minimize further damage to the sector.
The new tariffs could also have a ripple effect on US car manufacturers. Many US companies rely on global supply chains for components, and the tariffs may lead to increased production costs. Stock prices of major US automakers reflected investor concerns, with General Motors shares dropping 3.1% and Stellantis, the parent company of Jeep and Chrysler, seeing a 3.6% decline. However, Ford’s stock showed a slight uptick, closing 0.1% higher.
As the situation unfolds, both governments continue to explore potential solutions, with UK officials hopeful that negotiations will prevent further trade disruptions.
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