As the world braces for details of Trump’s ‘Liberation Day’ tariffs, a think-tank has said that a boost for homegrown EVs could help counter the tens of thousands of UK auto jobs at risk.

Buying new car concept. Vector of a businessman hand exchanging a new car for money

The US president is due to unveil details of the new tariffs in the White House Rose Garden as the US market closes.

If Trump confirms 25% tariffs on US car imports, this will put extraordinary pressure on the UK car manufacturing industry, threatening jobs and economic growth, finds a new report from the Institute for Public Policy Research (IPPR).

With one in eight UK built cars exported to the USA, British vehicle manufacturers face an extreme challenge, it’s warned.

Over 25,000 direct jobs in the car manufacturing industry could be at risk as exports to America are predicted to fall, with UK employees at Jaguar Land Rover and the Cowley Mini factory seen as some of the most exposed.

But the IPPR says the UK green transport manufacturing sector, which includes EVs, has the potential to make up for losses.

Its new report says there is only one way to secure transport manufacturing jobs in the UK and that is to double down on making sure Britain is competitive in zero- or low emission-transport products.

According to the report, the global export value of internal combustion engine cars fell by 24% between 2018 and 2022, while the sale of electric cars soared by 740%.

The authors say the UK has pre-existing strengths to take full advantage of this trend.

Over a third (35%) of cars manufactured in the UK in 2024 were electric or hybrid models, many of which were exported.

The think-tank says the UK currently has 4,938 firms in the UK that manufacture transport products and their components, with 263,000 employees and an annual turnover of £102.1bn. Many of which already manufacture green transport products, or have the capacity to.

In addition to making up for decreased car exports to the US elsewhere by focusing on capturing the growing international demand for green vehicles, it also reckons there is a huge untapped internal market. Car manufacturing in the UK is now 2.5 times lower than car registration – meaning there is currently a significant reliance on importing cars from abroad.

The think-tank argues that if the Government encourages consumers – both in the UK and internationally – to “buy British and buy green”, the UK could boost economic growth, create jobs and advance key climate goals.

IPPR is advising the Government to include the following in its upcoming industrial strategy:

• Expand UK demand for green transport products, by offering incentives on domestic-made electric cars to consumers, cutting VAT on public charging points and providing grants to lower-income buyers
• Leverage the public sector’s purchasing power by electrifying bus fleets and rail lines and ensuring procurement contracts prioritise UK-based producers
• Attract investment into green transport manufacturing projects by using the National Wealth Fund and British Business Bank to enter joint ventures with private funders and provide finance to promising businesses
• Capitalise on trade opportunities for green transport products, by reducing customs and regulatory frictions with the EU and introducing well-targeted tariff reductions for crucial inputs, such as battery components, to keep manufacturers’ costs as low as possible

Pranesh Narayanan, research fellow at IPPR, said: “Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry, affecting tens of thousands of jobs and putting the government’s growth plans at jeopardy.

“However, as one door closes another one opens. There is huge untapped potential in manufacturing green planes, trains and automobiles and selling them at home and abroad. If the Government use the upcoming industrial strategy to drive investment in these sectors, this could be the spark that leads to thousands of new consumers to start buying British and buying green.”