More than half of all businesses in the West Midlands would be hit by the US tariffs, finds
Robotics systems working on the chassis of a car at the JLR plant in Solihull(Image: Leon Neal/Getty Images)
More than half of all businesses in the West Midlands could be left worse off by the impact of Donald Trump’s tariffs war, a startling rapid review revealed today, Wednesday, May 7.
The region’s dependence on trade with the United States and its automotive industries makes it especially vulnerable, says the report commissioned by Richard Parker, Mayor of the West Midlands.
As a result, securing a US trade deal ‘within 45 days’ – even if it is imperfect – is essential to avoid structural damage to the region’s economy and the wider UK car industry, said report author Steve Rigby, co-CEO of the Rigby Group.
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No deal will cause long-term harm, he says.
The report, ‘Implications of New US Trade Tariffs for the West Midlands Economy’, found Donald Trump’s proposed tariffs, including 25 per cent on auto vehicles, will affect the West Midlands more than any other UK region.
The region is the biggest exporter to America of all regions of the UK, with cars making up the bulk of exports.
Carmakers including Jaguar Land Rover and Aston Martin, as well as multiple supply chain companies, help generate exports into the USA worth £8.5bn a year to the West Midlands, with 61 per cent of the total coming from automotive exports.
All 80,000 cars sold annually by Solihull-based Jaguar Land Rover (JLR) in the US are imported, most from the UK, while the US is Aston Martin and Bentley’s largest sales region, accounting for 25%-40% of its sales volumes, the report revealed.
There would be direct and knock-on impacts across the region – with 52 per cent of businesses predicting they expect to have to downgrade their profit forecasts by the end of the year as a result of tariffs. Currently on ‘pause’, if implemented as threatened they are forecast to cost the West Midlands economy £6.2bn over five years.
Steve Rigby is co-chief executive of The Rigby Group(Image: Handout)
Key findings from the report, which was compiled using data from CBI Economics and through extensive consultations with carmakers, manufacturers and other businesses across the West Midlands, also include:
● 10 per cent long-term tariffs can be absorbed, but 25 per cent tariffs risk causing structural changes to businesses across the West Midlands
● A less than perfect deal after 45 days is preferable to an improved one after 180 days. ‘No deal’ will have serious consequences for the West Midlands automotive sector within weeks
● Government support is needed to improve cash management for businesses, reduce red tape and prevent HMRC from holding up payments.
The report urged Government to heed the voice of the West Midlands businesses in ongoing negotiations. It was clear there was ‘no appetite for retaliatory measures’ locally.
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But businesses also wanted assurance from Government that reducing or scrapping tariffs on the automotive industry should be a ‘non negotiable’ plank of discussions.
The report also calls for actions to support domestic manufacturing including:
- Encourage the Government to ‘buy British’, especially in defence
- Help map supply chains to proactively manage future disruption
- Seek to reduce business energy costs
- Address competitive imbalances from importers and avoid product dumping while supporting UK manufacturers importing parts
The report was produced with engagement from the Confederation of British Industry (CBI), Make UK, the Federation of Small Businesses (FSB) and local West Midlands Chambers of Commerce.
Prime Minister Keir Starmer held a summit event at Jaguar Land Rover in Solihull to press home concerns about US tariffs(Image: Kirsty Wigglesworth/PA)
Mr Rigby said: “The West Midlands Mayor’s timely commissioning of this report, which involved extensive consultation with businesses across the region, expresses strong support for the government’s handling of recent US trade events.
“However, it also highlights an urgent need to negotiate the removal of 25 per cent tariffs for automotive products. Failure to secure a deal within weeks, not months, presents a structural risk to the regional and national economy.
“This report also shows that although tariffs and geo-political shifts undeniably present immediate challenges there is also opportunity which if harnessed could drive regional and national growth.”
Mr Parker said: “This report shows the strength of our region’s business voice and the value of working collaboratively. We’re ready to work with ministers to secure a deal that provides certainty for businesses in our region.
“It shows how active our businesses are across the world and how trade is so central to our regional economy.
“I want to thank Steve Rigby for leading this work with such clarity and urgency. There is strong support for the Government’s approach to negotiations so far – and a shared recognition that a swift agreement is essential. A timely deal would send a powerful message to business about the Government’s ambition for growth and would reinforce the West Midlands’ role at the heart of the UK economy.”