Professional Motor Mechanic caught up with the IAAF’s chief executive Mark Field recently to catch up on what impact the US tariffs on the automotive sector have had on the UK.
The latest Intelligence Roundup report from the IAAF and GiPA shines a light on the journey that UK suppliers have been on since President Trump announced a wave of tariffs on 2nd April last year, so-called “Liberation Day”. The report outlines the nine “distinct tariff shocks” that punctuated the 12 months following the announcement that vehicle imports would be subject to a 25 per cent tariff. It wasn’t until the following month that it was made clear that parts would also come under that decision.
The next month again, it was announced that the UK would be given a preferential rate – 10 per cent for vehicles, with parts remaining at 25 per cent. Meanwhile the EU secured a happy medium on both vehicles and parts at 15 per cent.
Relief seemed within sight in November as the Supreme Court debated the legality of the tarrifs. Additional costs to UK businesses dropped to 5.1 per cent, the lowest since the initial announcement in May. The optimism was short-lived, however, as the Supreme Court, three Justices of which were appointed directly by the president, came down on the side of the White House. Additional costs have since surged to a high of 13.8 per cent at the time of writing.
PMM spoke to IAAF chief executive Mark Field to find out what the additional costs meant for the aftermarket in the UK.
Do you foresee the sharp rise in costs we’ve seen since the Supreme Court ruling to plateau, rise or fall?
I think there’s still a lot of uncertainty on this subject and this coupled with the conflict in the Middle East means costs will most likely increase or stay artificially high. We’ve had to remain extremely resilient as a market as we adopt to new legal landscapes.
Are costs being passed onto garages?
I think it’s inevitable that increases will be passed on to the garage and then the consumer. I don’t think we’re seeing any contractions in volume in the workshops as a result though just yet. It’s important every business in the supply chain is as efficient as possible. We have explored with motor factors and garages the possibility of introducing a delivery charge due to rising fuel costs. These challenges represent opportunities for the supplier and customer to work closer together on areas such as ordering to ensure everyone in the supply chain remains profitable.
How much does trade with the US account for UK aftermarket suppliers’ business?
Exposure to the US varies considerably depending on the product category and individual business. We found that while direct trade with the US can have an impact regarding tariffs, so too can indirect trade, where a product is sent to the US from a different territory for further production before it arrives in the UK. You then are subject to the tariffs imposed on that country as well.
Parts are actually on a higher tariff than the EU – would UK parts suppliers be better protected and have more stability if the UK were still in the EU?
Businesses need a predictable trading environment that allows them to invest, plan and compete effectively. Any measures that reduce barriers, minimise costs and improve supply chain resilience are welcomed by the IAAF and aftermarket.
Image credit: ©AdobeStock/Andrii
