Donald Trump has announced plans to impose a 25% tariff on car imports, threatening to pile more pressure on the UK economy and escalate the global trade war.
The US president revealed the car and car parts tax will form part of his latest tariff announcement next week.
For the UK, which has the US as its second largest car export market after the EU, the tariff could have a significant impact, with 101,000 units equating to £7.6billion last year.
The new tariffs would come into force from April 2.
It's a move that could force chancellor Rachel Reeves to return to the drawing board to further cut spending or raise taxes to counter the impact of the tariffs.
Following Reeves' Spring Budget, the Office for Budget Responsibility cautioned there was a 50% chance she would need to impose further cuts or tax hikes should the UK's economic outlook worsen, The Times reports.
The watchdog specifically warned of the potential impact of tariffs imposed by Trump on UK exports.
Announcing the tariff, Trump said: “What we’re going to be doing is a 25% tariff for all cars that are not made in the United States.
“We start off with a 2.5% base, which is what we’re at, and go to 25%.
We’re going to make it all countries, and we’re going to make it very lenient. I think people are going to be very surprised.”
FTSE 100
The UK's flagship share index, the FTSE 100, was down 43-points at 8,636 shortly after opening this morning.
Brent crude oil futures were down 0.64%, trading at $73.54 a barrel.
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