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“While the tax on parts might not take effect until May, the new US tariff import policy imposing a global 25% tax on fully assembled and saleable vehicles has already begun. For vehicles already in the supply chain to the US from the UK and other global destinations, automotive manufacturers will probably have to take the hit short-term for the increases as the prices negotiations have been completed.

“However, if the global US tariff becomes a permanent fixture by the Trump administration, automotive companies will not be able to carry the long-term burden of the increased costs. This will become more noticeable when the tariff tax is expanded to the parts supply chain. The assembly of a vehicle requires parts coming into a centralised manufacturing plant, however there will also be decentralised smaller plants and suppliers offering specialised services.  Subsequently, component parts in the assembly may cross multiple borders accumulating tariff costs. So, when the tariff on parts takes place, it will only further increase the cost of the vehicle. 

“We should also consider this was attempted in Trump’s first presidential office to protect US steel jobs, with a 25% global tariff on imported steel. However, this resulted in a lower job tally of 80,000, compared to the 84,000 it had been in 2018.

“Will it last and is the UK right not to retaliate immediately? The US public will not be isolated to these increases due to the supply chains.  If US manufacturers are to bring everything in-house, it would take many years and not everything can be sourced within the US. The US citizen could soon find the price of locally made cars increasing and the option to buy cheaper imports has also become too expensive. The situation is far from ideal for a nation who like their cars.”