West Midlands mayoral report: Impact of Trump’s tariffs on region’s economy and UK car industry
Securing a US trade deal in “weeks, not months” is essential to avoid structural damage to the West Midlands economy and the wider UK car industry, according to a major new report commissioned by Richard Parker, Mayor of the West Midlands and prepared by Steve Rigby, co-CEO of Rigby Group, one of the region’s biggest businesses and employers.
The report, Implications of New US Trade Tariffs for the West Midlands Economy, found that proposed US tariffs will affect the West Midlands more than any other UK region, with 52% of all businesses across the region expecting to have to downgrade their profit forecasts by the end of the year.
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, include:
● 10% long term tariffs can be absorbed, but 25% tariffs for the auto industry 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 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. It finds that while there was widespread support for the government’s approach to tariff negotiations, the West Midlands’ high exposure to US automotive exports means there is an urgent requirement to negotiate a deal to avoid significant damage to the economy.
US proposed tariffs, including 25% imposed on auto vehicles, are forecast to cost the West Midlands economy £6.2bn over five years, according to the research. In addition, the anticipated wider disruption to global supply chains means half of businesses across the region expect their turnover to decline and 29% anticipate significant impact to their businesses by the end of the year.
The West Midlands is home to carmakers including Jaguar Land Rover and Aston Martin, and its economy is uniquely exposed to automotive tariffs. US exports from the West Midlands are worth £8.5bn a year, more than any region in the UK, with 61% of the total coming from automotive exports.
Richard Parker, Mayor of the West Midlands, 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.”
Steve Rigby, co-CEO of Rigby Group, 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% 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.”