Tariffs: 'relief' for British auto workers

Thousands of British automotive sector jobs hung in the balance after US President Donald Trump imposed an additional 25 per cent tariffs on imported cars from the UK and other countries.

But in a dramatic turn of events earlier this month, Trump and prime minister Keir Starmer announced a US-UK tariffs deal, which would see import duties on a maximum of 100,000 British-made cars over the next year cut from 27.5 per cent to just 10 per cent.

The deal, which was announced by Starmer in a speech at a Jaguar Land Rover (JLR) plant in Solihull, also slashes tariffs on steel and aluminium to zero.

UK business secretary Jonathan Reynolds highlighted just how vital this swiftly agreed tariffs agreement was.

 “This was very, very serious,” he said. “It means people would have lost their jobs without this breakthrough, and it would have been a real economic hit to the UK.”

It is understood that job losses at JLR would have been likely, were it not for the time-limited, eleventh-hour deal, which is the first deal any country has agreed with the US since the Trump tariff regime came into force.

‘Huge relief’

Unite national officer for automotive Des Quinn said the announcement came as a “huge relief” to Unite members working in the sector.

“There would have almost certainly have been redundancies,” he told UniteLive. “We now know that the worst of what could have happened isn’t going to happen in the short-term. It takes away any immediate concerns and gives us some breathing room.”

Unite JLR Solihull plant convenor Steve Evans agreed.

“Our members were very worried, and there was a big sense of relief afterwards,” he said. “I’m always mindful of the supply chain too – for every one car worker there are a further six in the supply chain. The impact of the tariffs could have been catastrophic.”

Steve praised prime minister Keir Starmer for his statesmanship in what would have been a very tense situation on US tariffs, and he added that he was hopeful for the future.

“Keir Starmer knows the tariff agreement is a good, solid base to further grow our relationship with the US, to try and get us the best terms possible,” he noted.  

Des noted that although the deal was a “good starting point”, it was a “long way off from the finished article”.

As part of the deal, the tariffs are reciprocal, meaning that American cars imported into the UK will also be subject to an import duty. The deal also stipulates that a 10 per cent tariff applies to a quota of 100,000 cars over the next year. If any more British cars are imported into the US over this quota, then the 27.5 per cent tariff applies.

“The long-term aim has got to be no taxes either way, and no quotas,” Des explained. “We aren’t concerned about US cars being imported into the UK. That’s because British buyers just aren’t interested in the cars US manufacturers tend to build. But we know there’s great demand from American buyers in our premium sector cars.”

Indeed, cars are the UK’s biggest export to America – collectively worth around £9bn last year. Many of these are luxury cars, including brands such as Aston Martin, Jaguar Land Rover, and MINI, among others. Jaguar Land Rover (JLR) alone sells nearly a quarter of its cars to the US.

Both Des and Steve agree that while the tariff deal has avoided a jobs cliff edge for the next year, the UK’s automotive sector needs much more from the government to fend off a crisis, and beyond this, to go on to thrive.    

One of the biggest obstacles for the UK automotive sector is exceptionally high industrial energy prices in Britain. In fact, UK industrial energy prices – the prices that businesses rather than individuals pay for energy such as gas and electricity – are the highest in all of Europe. This makes it hard for British automakers to compete on the world market.

ZEV mandate

Des went on to highlight the need for further reform of the Zero Emissions Vehicle (ZEV) mandate, which is also harming the sector.

The ZEV mandate came into effect in January and requires car manufacturers to sell a greater percentage of electric vehicles each and every year until 2035, when no new petrol or diesel vehicles can be sold. Failure to meet targets each year can result in fines of £12,000 per non-compliant vehicle.

The mandate was originally devised by previous Tory governments, and Steve said their initial mandate was confusing and overly punitive – fines were higher at £15,000 per vehicle, and the deadline for no new combustion engines was five years earlier in 2030.

“We have to understand that the transition to electric vehicles is the biggest change to the car industry and its supply chain in over 100 years,” Steve explained. “We need to get that transition right.”

Steve praised the Labour government for listening to the industry by making “sensible adjustments” to the ZEV mandate last month. It is now more flexible, with lower fines per vehicle and a longer deadline until manufacturers must only sell electric vehicles.

There is also a system of ‘credits’, where car manufacturers can avoid fines if they don’t meet their targets. If, for example, they produce more than their quota of electric cars in a given year, they can use the excess as credits for their van quotas. Manufacturers who fall short of their targets can also trade credits with other manufacturers who make an excess of electric vehicles.

While this is an effective way to avoid fines, both Des and Steve highlight the unintended consequences.

“Companies like Tesla, they’re our direct competitors. So now we’re in this ridiculous position where we’re lining the pockets of our direct competitors, buying credits from them to avoid fines,” Steve explained.

Des agreed, adding that Chinese firms were among those companies British car manufacturers are buying credits from.

“The Chinese car industry is already around 25 per cent state-subsidized, so we’ll be further subsidising them through purchasing credits from them. It puts us at a huge competitive disadvantage – they’ll basically be eating our dinner.”

Way forward

Steve said that zero-emissions goals should be similar across major global markets so that there’s an even playing field. He points to the EU’s equivalent of the UK’s ZEV mandate, which functions more as a series of incentives without fines. The EU is also supportive of low-emissions vehicles as a part of the transition to zero-emissions over the next decade.

“We can’t solely focus on zero-emissions now if it’s going to have an impact on jobs,” Des added. “We’ve got to have joined up thinking between government departments, with departments responsible for jobs and growth having the final say. We’ve got to have a realistic trajectory for achieving zero emissions – and if that means low-emissions vehicles as part of the journey, then we’ve got to consider it.”

Des emphasised that car manufacturers, trade unions and a body called the Advanced Propulsion Centre (APC), which facilitates funding for zero-emissions technologies, are all aligned in what support they want to see from government.

“If the government sits down and talks to all of these bodies, then we can find a way forward based on a proper industrial strategy.”

Steve is hopeful that because the Labour government listened when it first amended the ZEV mandate, it will continue to be receptive to the industry’s needs. He described exactly what was at stake if the government didn’t listen.

“These are highly skilled, well-paid, unionised jobs on the line. If JLR went out of business, that’s not only 40,000 jobs direct gone, but a further 240,000 in the wider supply chain,” he said. “This alone would have a huge impact on communities across the West Midlands. If these jobs were lost, you’d have fewer people going to the pub, the cinema or the football. If local businesses close, then that has a further domino effect. Who wants to invest in an area where all the shops are closed? That’s why it’s vital that we have a seat at the table and make sure our voice is heard.”

Unite general secretary Sharon Graham highlighted the relief that workers in car manufacturing and others impacted by tariffs are now feeling after the agreement which, she said,  “provides some respite…and lessens immediate threats to jobs”.

“However, the government would be wrong to think this marks a long-term solution to the challenges facing UK industry,” Sharon added. “The tariff issue has starkly revealed the world is becoming increasingly unpredictable and measures must be in place to properly protect UK industry. Our industries need to be actively backed not left hanging in the wind.

“Government action should include a reduction in energy costs, clear rules on buying British goods and a reform of the ZEV mandate which protects car workers jobs.”

By Hajera Blagg

Find out more about Unite in the auto sector on our webpage here.