A new wave of tariffs imposed by former U.S. President Donald Trump has sent shockwaves through global markets, wiping billions off the value of major European carmakers and dealing a fresh blow to the UK’s automotive sector.
Trump’s decision to impose a 25% tariff on all imports of cars and parts into the U.S.—set to take effect on April 2—triggered sharp sell-offs in global equities, with automakers suffering the most.
Shares in leading German manufacturers Mercedes-Benz, BMW, Porsche, and Volkswagen fell between 2% and 5%, while Stellantis—the parent company of Vauxhall, Fiat, Citroen, and Peugeot—dropped 6% in Paris. London’s luxury carmaker Aston Martin also saw a 4.47% decline, dragging the FTSE 100 index down 0.6% to 8,638.04. Meanwhile, Germany’s DAX lost 1.42% and France’s CAC 40 fell by 1%.
The impact extended beyond Europe. In after-hours U.S. trading, General Motors fell 8% and Ford declined 3.7%. Asian markets followed suit, with Toyota, Nissan, Mazda, Hyundai, and Kia all registering losses. Tata Motors, the parent of Jaguar Land Rover, saw a 5% drop on India’s stock exchange.
UK Automotive Industry Faces Fresh Challenges
The tariffs pose a significant threat to the UK’s automotive industry, which relies heavily on exports to the U.S. According to the Society of Motor Manufacturers and Traders (SMMT), the U.S. is the UK’s second-largest car export market, accounting for nearly 17% of total vehicle exports—approximately 79,000 cars in 2024.
Nissan’s Sunderland plant, the largest car production facility in the UK, exported more than 73,000 vehicles to the U.S. last year, making up 10% of its total output. Luxury brands such as Rolls-Royce, Aston Martin, and McLaren are also highly dependent on U.S. sales. The SMMT has warned that with nearly 80% of cars made in Britain being exported, any disruption to international trade could severely impact the industry’s recovery.
Even before the tariffs, the British car sector was struggling. Production fell 11.6% in February, marking the twelfth consecutive month of declines, according to the SMMT’s latest figures.
Global Response and Economic Fallout
Defending the tariffs, Trump argued that the U.S. was “the piggy bank that everybody steals from,” stating that he views them as a means to finance tax cuts and support domestic industry. However, economists warn that the tariffs will lead to higher prices, supply chain disruptions, and potential retaliatory trade actions from affected nations.
Trump has further threatened to escalate tariffs if countries retaliate, stating, “If the EU and Canada team up to retaliate, we’ll go further.”
Canada’s Prime Minister Mark Carney condemned the tariffs as a “direct attack” and vowed to protect national interests. Meanwhile, Japan and South Korea signaled that emergency responses were being prepared. European Commission President Ursula von der Leyen stated that the EU would seek “negotiated solutions while safeguarding its economic interests.”
In the UK, Chancellor Rachel Reeves told Times Radio that discussions were underway to secure a trade agreement with the U.S. to avoid the tariffs. However, economists caution that even if the UK is exempted, it could still suffer from the knock-on effects of broader global trade tensions.
David Miles, an economist at the Office for Budget Responsibility (OBR), highlighted the growing risks: “There is a growing realization that we could be in for a major blow to trade that wasn’t there a few weeks ago.” The OBR now projects that if global trade tensions escalate into a full-blown tariff war—resulting in an average increase of 20 percentage points in import duties between the U.S. and its trading partners—UK GDP could shrink by up to 1% at its peak.
With the tariffs set to take effect from April 3 and further retaliatory measures looming, the risk of a full-scale trade war is escalating. For UK and European carmakers already facing economic pressure, Trump’s latest move could have far-reaching consequences.
