The North East automotive sector is not thought to be in the direct firing line of swingeing tariffs imposed by US president Donald Trump, but it could feel wider secondary impacts.
As the lynchpin of the region's cluster, Nissan's Sunderland operation produces cars destined for the º£½ÇÊÓƵ and European market. However, a number of its neighbouring North East suppliers - including Faltec Europe, Nifco and Kasai º£½ÇÊÓƵ - make components for other manufacturers, among them prestige brands such as Jaguar Land Rover, which is thought to be more at the mercy of a blanket 25% rate applied to cars built outside of the US.
Paul Butler, CEO of the North East Automotive Alliance said: "The blanket 25% tariff on all cars and car parts imported to the US announced by President Trump is disappointing but not surprising. However, these tariffs will not have an adverse effect on the NE automotive sector as Nissan Sunderland do not export to the US and the number of suppliers exporting to the US is minimal – though, due to the global nature of the automotive sector, they will, undoubtedly, impact parent companies of North East operations.
"For the wider º£½ÇÊÓƵ automotive sector it will have an impact, particularly for some of the more iconic brands from the º£½ÇÊÓƵ. Last year the º£½ÇÊÓƵ exported over 101,000 cars to the US with a total value of £7.6bn. This makes the US the third biggest market for British built cars behind the EU and º£½ÇÊÓƵ markets, who account for 70% of all º£½ÇÊÓƵ manufactured vehicles. The º£½ÇÊÓƵ and US automotive industries have a long standing and productive relationship, we need to look at how we can work together to drive growth in both markets.
"A global trade war and tit-for-tat retaliations, will have an impact on global trade and lead to increased prices for º£½ÇÊÓƵ consumers. The º£½ÇÊÓƵ Government’s calm approach whilst seeking a trade deal will, hopefully, minimise any impact for º£½ÇÊÓƵ consumers."
Think tank the Institute of Public Policy and Research has suggested up to 25,000 jobs could be under threat while research from Birmingham University's City-Region Economic Development Institute estimates the automotive tariffs could cost the º£½ÇÊÓƵ £9.8bn in GDP between now and 2030, and put 137,000 jobs at risk.
In an interview on the BBC's Today programme, the Business Secretary, Jonathan Reynolds, admitted the imposition of tariffs will cause worry in the country's automotive sector but said the Government was working in the interests of British Businesses. He said: "There will be people in key sectors like automotive very worried in the º£½ÇÊÓƵ today and I want them to know - and I want them to be calm and reassured - this is the job of the British Government, we'll keep that work going."
Downing Street is in the midst of attempting to negotiate a wider trade deal with Washington. At the same time, Mr Reynolds launched a consultation with businesses on the implications of potential retaliatory efforts - a move he said was necessary to "keep all actions on the table".
The Society of Motor Manufacturers and Traders (SMMT) - the key automotive voice in the country - echoed disappointment about the "punitive" tariffs and said it was yet another challenge for the sector which was already facing several headwinds. But said it hopes the º£½ÇÊÓƵ and US could still negotiate a deal.
Mike Hawes, SMMT chief executive, said: "These tariff costs cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst º£½ÇÊÓƵ producers may have to review output in the face of constrained demand. Trade discussions must continue at pace, therefore, and we urge all parties to continue to negotiate and deliver solutions which support jobs, consumer demand and economic growth across both sides of the Atlantic."
