Britain’s manufacturers will start cutting jobs “within weeks” unless the government can strike a deal to safeguard the UK economy from Donald Trump’s trade war, industry leaders have told MPs.
Senior executives from the UK’s automotive, manufacturing and energy sectors warned a committee of MPs to expect job losses this summer if the US moves ahead with a swathe of global trade tariffs set out by Trump earlier this month.
The stark warning has emerged as the chancellor, Rachel Reeves, travels to the US to hold her first in-person meeting with her American counterpart, Scott Bessent, about striking a new trade agreement to soften the blow of Trump’s looming trade war.
Otherwise, the UK government may need to put in place a Covid-style furlough scheme to cover the wages of those likely to lose their jobs this summer, the industry figures said.
Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), said Trump’s moves to upend the global economy were likely to have a “severe, significant and immediate” impact on high-end UK carmakers which serve the US market.
He said that lay-offs for carmakers including Rolls-Royce, Bentley, Aston Martin and McLaren would be a last resort to avoid losing “highly talented people” but that would be “a question of weeks rather than months” before job losses begin.
“The impact is now, which is why we need to make sure either we get a deal very quickly or there is a mechanism to support the industry in the coming weeks and months,” he said.
Hawes urged ministers to “look again” at the government furlough scheme, which was used to support workers hard-hit by the impact of the Covid pandemic “as a temporary measure”.
The warnings were echoed by Stephen Phipson, the chief executive of Make UK, a trade group for manufacturers, who said that companies could start laying off staff by the summer if the UK cannot secure a deal with the US to soften its tariffs of 10% on all goods as well as 25% tariffs on steel, aluminium and cars.
The US trade tariffs put in place less than three weeks ago has prompted some manufacturers to cut agency workers and temporary roles, according to Steve Turner, the assistant general secretary of the union Unite.
The looming impact of the trade tariffs threatens to compound the challenges facing UK manufacturers, which face some of the highest energy costs in the world due to the UK’s heavy reliance on gas.
Alan Johnson, a senior executive at Nissan, told the MPs that the carmaker’s Sunderland factory is one of its most efficient but “pays more for its electricity than any other Nissan plant in the world”. He said the UK was “not a competitive place to be building cars today”.
The executives called on ministers to follow through on its plan to put forward its modern industrial strategy alongside plans to drive down energy costs.
