Trump tariffs: Which UK sectors will be hit hardest?

Donald Trump unveiled a range of tariffs in a speech at the White House on Wednesday evening, with a 10% “baseline” import tax slapped on every country that sends goods to the US.

This means the UK will be hit with the 10% tariff on all exports – compared with a 20% rate facing the European Union, and significantly higher levies for countries such as China and Indonesia.

Meanwhile, car, steel and aluminium exports will all come under a 25% tariff.

Below, the PA news agency looks at which sectors will be most affected by the plans and what it means for businesses and households.

– Carmakers and manufacturing

Cars are the top product exported from the UK to the US.

In the year to end of September 2024, car exports were worth ?8.3 billion and made up nearly 14% of all goods going across the pond, according to data from the Office for National Statistics.

For UK carmakers, the US is the second largest export market behind the European Union.

Industry groups have warned the taxes will hammer the industry and force firms to rethink where they trade.

More than 25,000 car manufacturing jobs in the UK could be at risk because of US tariffs, according to a report by think tank the Institute for Public Policy Research.

Jaguar Land Rover, one of the country’s biggest carmakers, exported about 38,000 cars to the US in the third quarter of 2024 – almost equal to the amount sold to the UK and the EU combined.

A spokesman for JLR said the group was addressing the new US trading terms, but assured the business was “resilient” and “accustomed to changing market conditions”.

Tom Jervis, consumer reporter at? motoring publication Auto Express, said it is the “blue-collar worker and consumer that will be affected the most”.

He said the tariffs “could, in a very worst case scenario, see UK factories close in favour of new facilities being opened up in the US, or perhaps more likely, instigate hundreds or even thousands of job losses as firms scramble to cut manufacturing costs further”.

– RetailExperts said Mr Trump’s worldwide reciprocal tariffs could have a significant knock-on impact for retailers that export goods to the US from international markets, particularly Asia.

Kate Calvert, an analyst for Investec Economics, highlighted the new 46% tariff on Vietnam, 49% on Cambodia, and 42% on Indonesia.

These charges could result in higher costs for clothing and footwear retailers that source materials or manufacture from these countries and sell goods in the US.

Some companies could be “hit hard”, with the likes of Adidas and Nike and most athleisure brands particularly affected, she said.

UK retailers JD Sports, Dr Martens, Watches Of Switzerland, Asos, and WH Smith were all flagged for having a significant proportion of their sales generated in the US – while some also import heavily from international markets.

Shares in US-based Adidas was tumbling by a 10th on Thursday, while British retailer JD Sports saw its share price drop nearly 5%.

Watches Of Switzerland shares plunged by about 15% in the afternoon.

Ms Calvert said the impact of new tariffs were unlikely to immediately raise prices, but that exposed companies would have to “make decisions pretty quickly”.

– Steel and aluminiumThe value of UK exports to the US is significantly smaller than the auto sector, but the US is also the second largest market for steel and aluminium exports, behind the EU.

Steel exports totalled about ?390 million in 2023, according to UK Steel.

The industry group warned the new tariffs were a “devastating blow” to manufacturers, and also said they would be “self-defeating” for the US “as the UK is a leading supplier of specialist steel products required by their defence and aerospace sectors”.

“UK Steel has warned that the steel crisis has been deepening for some time and bold, decisive and significant interventions are needed now,” director general Gareth Stace said.

The move is seen as the latest blow to an industry which has seen thousands of job losses in recent years due to issues including global competition, high energy costs and the shift to cleaner technologies.

– Spirits

Spirits and other alcoholic drinks are among the UK’s most significant export sectors, particularly in Scotland due to global demand for scotch whisky.

Industry bosses have previously warned that the tariff plans will hit a key market for whisky and gin.

However, shares in the world’s largest spirits manufacturer, UK-based Diageo, were higher on Thursday despite the confirmation of 10% tariffs.

Analysts from Jefferies suggested the company, which makes Gordon’s gin and Johnnie Walker whisky, will see a 100 million dollar (?75.9 million) gross hit to its profits – roughly 2% of profits – before any mitigating actions.

However, this is proportionately less than that felt by a raft of EU-based rivals, including Jameson’s maker Pernod Ricard and Aperol maker Campari.

Meanwhile, UK winemaker Chapel Down announced a new US export agreement despite the tariff announcement.

Chief executive James Pennefather said it still has “exciting ambitions” to grow in the US but stressed it was “too early” to fully consider how changing tariff rules could affect its plans.

– Pharmaceuticals

The pharmaceutical sector is among those still facing some uncertainty regarding the US tariff regime.

On Wednesday night, a fact sheet produced by the White House appeared to suggest that pharmaceutical goods imported into the US will be exempt from the 10% tariff, at least for now.

Shares in GSK (GlaxoSmithKline), AstraZeneca and Haleon all climbed in value on Thursday as a result.

GSK shares were 3.4% higher, AstraZeneca was up 2.6% and Sensodyne maker Haleon was up 1.9%.

However, analysts at Shore Capital said it is still “somewhat unclear whether the broader reaching 10% baseline tariffs could still be levied against imported drugs and vaccines”.

Meanwhile, Paul Diggle, chief economist at Aberdeen, said he believes “additional sector specific tariffs are coming” in the sector.