Donald Trump’s threatened tariffs on imported cars could jeopardise around 25,000 UK jobs, with British manufacturers heavily exposed to the US market, according to a new report from the Institute for Public Policy Research (IPPR).
Roughly one in eight cars built in Britain is shipped to the US, meaning that a 25% levy - expected to be confirmed by the former president today - could hammer UK-based exporters such as Jaguar Land Rover and BMW’s Mini plant in Oxford.
The centre-left think tank warns the tariff could “completely destabilise” the UK’s car manufacturing sector, but also sees an opportunity for Britain to lean into its strengths in green transport - from electric cars to low-emission trains and planes.
While the global trade in petrol and diesel cars shrank 24% between 2018 and 2022, electric vehicle sales soared by 740%.
The UK is well-positioned to take advantage, IPPR argues, with over a third of cars made last year being electric or hybrid models and more than 4,900 firms already involved in transport manufacturing.
“Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry,” said Pranesh Narayanan, a research fellow at IPPR. “But as one door closes, another opens.”
To seize the moment, IPPR says the government should use its upcoming industrial strategy to encourage consumers to “buy British and buy green”.
That includes offering tax breaks on UK-built EVs, cutting VAT on public chargers, and electrifying public transport fleets.
The report also calls for new finance tools to attract private investment and recommends removing regulatory barriers to EU trade while lowering import costs on key components such as batteries.
IPPR believes these steps could boost UK production, cut emissions and build resilience against future trade shocks.