Trump tariffs could have direct impact on UK fleet market, says AFP

Plans mooted by US president elect Donald Trump to impose huge tariffs on imported vehicles could have a direct impact on the UK fleet market, the Association of Fleet Professionals (AFP) is warning.

During his election campaign, Trump variously promised that tariffs of 100% or 200% would be imposed on all vehicles imported into the US, as well as 60% on all Chinese goods, which would directly affect electric vehicles (EVs) made in China.

“There seems to be some confusion whether these tariffs are actual plans by the Trump administration or some kind of gambit to negotiate more advantageous trade deals. However, tariffs at this kind of level would effectively make imported cars unsaleable in the US and, of course, there have also been sometimes substantial tariffs recently imposed in the EU.

“All of that production aimed at the US – especially large numabers of Chinese EVs – will inevitably make its way towards freer global markets, the UK being one. So far, the actions of new Chinese entrants have been quite measured but there will be a huge temptation to dump large numbers of cars and vans here at low prices, causing high levels of disruption.

“Quite what the effect of all of this might be is difficult to say. At the extremes, our government might decide that domestic manufacturers need similar protection and introduce tariffs of its own, step back and let the market find its level, or any of a hundred points in-between. The future view looks quite murky.”

UK fleets would be left in a difficult position, Hollick explained, with a domestic market that was tricky to read, and vehicle buying decisions that could be hugely risky.

“On one hand, having access to a supply of cheap Chinese EVs would arguably be good for fleets in their transition to net zero, and also provide a boost to the retail EV market. However, this is likely to come at the risk of stability and a volatile market is ultimately a bad one where, for example, forecasting accurate residual values becomes very difficult.”

Fleets would be watching Trump’s statements carefully over the next few weeks, Hollick added.

“The sooner there is some clarity around the situation, the better. It is not a political point to say that what the president elect says and what he does are quite often two different things but it seems likely that, given the extent to which he has spoken about tariffs during his campaign, this is not an issue that is going to go away.

“The truth is that tariffs imposed by a major western economy of the scale being promised are almost unknown in modern times and it is difficult, if not impossible, to forecast the impact. However, it’s also true that some economists are making quite dire predictions. We await the outcome with some trepidation.”