Talks to avoid tariffs to “continue at pace”

The Government says that talks to secure an economic deal between the UK and US will “continue at pace” ahead of a deadline on US tariffs.

New import taxes of 25% on cars and car parts entering the US were announced by President Donald Trump last week.

The tariffs will come into effect from Wednesday (April 2), with charges on businesses importing vehicles starting the next day. Charges on parts are expected to start in May.

President Donald Trump and Prime Minister Sir Kier Starmer spoke on the phone yesterday (Sunday, March 30), with Downing Street describing the call as “productive”.

The UK Government is trying to win a last-minute exemption ahead of Trump's 25% levy.

The PM has previously said he does not want to get into a trade war with the US, but the UK “reserves the right” to introduce reciprocal tariffs on the US if a deal to exempt the UK cannot be reached.

Some eight million cars were imported to the US last year, equating to $240 billion (£185bn) in trade and approximately half of overall sales.

Mexico is the largest supplier of cars to the US, followed by South Korea, Japan, Canada and Germany. 

For the UK, the US is the second largest car export market after the EU.

The Office for Budget Responsibility (OBR) has warned a trade war would be detrimental to economic growth.

The OBR's latest economic forecast, published on Wednesday, said GDP would be 0.6% lower than forecast this year and 1% lower next year in the most severe scenario, in which the UK and other nations retaliated to Trump's tariffs.

In an alternative scenario where the UK does not retaliate, the OBR has forecast a smaller reduction in growth, with GDP 0.4% lower than expected this year and 0.6% lower next year.

Automotive trade body, the Society of Motor Manufacturers and Traders (SMMT), says that rather than imposing additional tariffs, the US and UK should explore ways in which opportunities for manufacturers can be created as part of a “mutually beneficial relationship”, benefitting consumers and creating jobs and growth across the Atlantic.