More than £14 billion has been wiped off the value of the world’s biggest carmakers after President Trump escalated a global trade war by imposing 25 per cent tariffs on imports of cars and parts.
By the close of trading on European equity markets on Thursday, shares in the German manufacturers Mercedes-Benz and BMW, which owns Rolls-Royce and Mini, had fallen by 2.7 per cent and 2.6 per cent respectively. The owner of Vauxhall, Stellantis, which also makes Fiat, Citroën, Peugeot and Chrysler cars, fell 4.2 per cent in Paris.
The struggling British luxury car maker Aston Martin dropped 6.7 per cent in London, where the FTSE 100 index snapped a two-day winning streak with a drop of 0.3 per cent to 8,666.12. Germany’s Dax fell 0.7 per cent and France’s CAC lost 0.5 per cent.
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The sell-off in car manufacturers continued in New York, with shares in General Motors closing down 6.5 per cent and Ford 2 per cent lower. Carmakers in Asia fell for a second day on Friday. Japan’s Toyota fell 2.75 per cent and Honda slid 2.6 per cent, while South Korea’s Hyundai lost 4 per cent and Kia was down 3 per cent.
“The entire automotive industry, global supply chains and companies as well as customers will have to bear the negative consequences,” Volkswagen said.
Nearly half of all cars sold in the United States last year were imported, with Trump claiming that the US was “the piggy bank that everybody steals from”. The president sees tariffs as a tool with which to raise revenue to offset his promised tax cuts and revive a long-declining US industrial base.
Europe’s carmakers exported about 800,000 vehicles to America last year, according to official trade data, about four times the number of cars exported by the US to Europe. Volkswagen is particularly exposed, with more than 40 per cent of its US sales sourced from Mexico.
America is the second largest car export market for UK-built vehicles, especially for luxury and premium brands such as Aston Martin, Rolls-Royce, and McLaren.
For Nissan, which owns the country’s biggest car plant in Sunderland, the US was the second largest destination for its UK exports in 2024, with 73,571 units or 10.3 per cent of the total.
The Society of Motor Manufacturers and Traders (SMMT) said that nearly eight in ten cars produced in Britain last year were destined for export, with 77.5 per cent (467,937 cars) shipped to the top three markets: the EU (54 per cent), US (16.9 per cent or 79,081 car) and China (6.6 per cent).
Exports to the EU and China were down -24.3 per cent and -21.8 per cent respectively in 2024, but those to the US rose 38.5 per cent, the SMMT said.
Trump’s tariffs threaten to wipe out UK’s economic growth — full report
Data released by the SMMT on Thursday highlighted the pressures already facing UK carmakers even before Trump announced the tariffs. Car production in Britain fell for the twelfth month in a row in February — down 11.6 per cent.
“There are no ‘winners’ in the absolute, only relative winners, with a significant amount of cost set to be introduced into the industry,” Barclays analysts said, calling Trump’s tariffs a “more draconian outcome than most anticipated”.
The new import taxes will go into effect on April 2; on that same date Trump plans to announce reciprocal tariffs aimed at the countries responsible for the bulk of the US trade deficit. Collection of the new car tariffs would begin on April 3.
Mexico, Japan, Canada, South Korea, and Germany are the biggest exporters of cars to the US.
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Ursula von der Leyen, president of the European Commission, said: “Tariffs are taxes — bad for businesses, worse for consumers equally in the US and the European Union,” adding that the EU’s executive branch would assess the impact of the move.
Trump said he might hit the EU and Canada with larger tariffs if they teamed up to retaliate.
Rachel Reeves, the chancellor, told Times Radio on Thursday that the UK was working on a trade agreement to avoid the tariffs.
Even if the UK is spared, Trump’s global trade measures would still have an impact on the country. David Miles, an economist at the Office for Budget Responsibility (OBR), said that as a result of Trump’s tariffs there was “a growing realisation that we could be in for a major blow to trade that wasn’t there”.
