Returning president Donald Trump has been back in the White House for barely two weeks, and already he’s begun signing off on a range of tariffs targeting foreign imports into the US. Economists say that it’s not great news for anyone, but it’s particularly unwelcome for a couple of sectors that rely on globalised supply chains. (In other words, selling products and services that are assembled or processed in a range of different countries.) The global automotive industry is one of them.

So, the big questions you’re probably asking are – will it affect UK car prices? And will it affect the price I get when I scrap my car? Well, there’s a long answer and a short answer to both of those questions. The short answer is: probably, but only up to a point. The long answer… well, read on!

What are tariffs and why are they big news right now?

Tariffs are essentially taxes or duties placed on imported goods. They’re not uncommon – almost every country places some form of tariff on most imported goods. They’re often designed to protect local industries from foreign competition, or to encourage domestic manufacturing.

The reason why they’re so contentious at the moment is because the global economy is in an increasingly more precarious state, with rising costs of living worldwide. In light of that, countries like Canada view America’s latest use of tariffs as a political weapon, to coerce other countries into doing what it wants.

As we’ve touched on, the automotive industry is particularly vulnerable to tariffs because it relies heavily on parts sourced from multiple countries. For example, a single car might have components from the EU, the US, Japan, and South Korea, making the cost of production sensitive to tariffs on those imports.

So what does that mean for us here in the UK?

Unlike Mexico, Canada, China, the UK isn’t technically in the Trump administration’s crosshairs for tariffs at the moment. On the other hand, the European Union is. That matters because cars on Britain’s roads are generally manufactured by a wide variety of European carmakers – including Spanish, German, French and Italian brands – so any economic pain felt by them is likely going to affect us here in the UK too (at least to some extent).

New tariffs like this leave car manufacturers in a difficult position. Typically, they’ve generally got two choices: either absorb the extra costs to keep prices stable, or simply pass them on to the consumer. The first involves extra operational cost, whereas the second risks alienating customers in the long term – so it’s a tricky balance to strike.

Luxury cars

Luxury car brands, such as BMW or Mercedes-Benz, might be more likely to absorb the increased costs in an effort to maintain their premium market position. However, even luxury cars could see slight price increases, as tariffs impact manufacturing processes and component sourcing.

Consumer cars

Mainstream brands like Ford, Vauxhall, or Toyota are far more likely to pass on the costs of increased tariffs to consumers, which may well mean higher prices. That could have a knock-on effect on the second-hand market, which is likely to experience an uptick in demand as people turn to used cars to avoid the inflated costs of new models.

Electric vehicles, or EVs

For electric cars, the impact could be especially pronounced. EVs are heavily reliant on international supply chains for components, particularly batteries, which are largely produced in China or South Korea. With tariffs on these essential parts, the cost of manufacturing electric cars could rise significantly, leading to higher prices for consumers. This could make EVs less affordable for the average UK buyer and may slow the transition towards greener cars, which has been a big mission for successive UK governments in recent years.

Used cars

One of the biggest effects of these tariffs on the UK market could be an increased demand for used cars. As new car prices climb due to tariffs, many buyers may find it more affordable to purchase a second-hand car. This trend could drive up the prices of used cars in turn.

Are there any upsides?

There are a couple, but they’re more mitigating factors than silver linings. For starters, higher prices for used cars wouldn’t be universally unwelcome, as it could be great news for car owners looking to sell, as sellers are obvious the main beneficiaries of higher resale values might.

There’s also the possibility that some manufacturers might look to relocate production to more tariff-friendly countries or shift to more localised supply chains within the UK or EU. This could help reduce costs in the long term, but it would take time to reorganise supply chains and adapt to new production systems.

Above all though, it’s worth saying that at the time of writing, there have been no specific new tariffs on EU carmakers levied by the USA, although there is a lot of discussion surrounding the possibility. So at the moment, the prospect of higher prices remains largely hypothetical – we’ll just have to see how the next few weeks pan out!

Speaking of buying and selling cars, if you’re considering upgrading your own (or even going car-free for a bit), that’s exactly where we can help here at EMR Vehicle Recycling. With more than 70 years of experience and partnered with recycling facilities all over the UK, we’re focused on getting you the very best price when you scrap your car.

All you have to do to get started is put your car reg and postcode into the fields on our homepage, and we’ll have an instant online quote to you in seconds. There’s no obligation to proceed until you’re ready.

So then… ready to find out how much your car is worth?