Trump tariffs: Tesla’s UK subsidies under scrutiny, Rachel Reeves confirms review

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Tesla’s substantial British taxpayer subsidies came under renewed investigation after Donald Trump’s announcement of a 25 percent tariff on imported vehicles to the US.

Chancellor Rachel Reeves said the government is reviewing its transition rules for electric vehicles, amid calls for reciprocal rates on Tesla imports.

The Liberal Democrats advocated for rates on Tesla, referring to the support of the owner Elon Musk for the US president.

“Given Musk’s significant support to Trump, setting rates on Tesla imports would be an appropriate response,” a party spokesman said.

Data published by analysts Tusell in January revealed that Tesla has benefited from £ 188m in UK taxpayer subsidies since 2016, mainly by the plug-in car awards scheme.

This scheme offers financial incentives for the purchase of low emission vehicles.

Tesla -owner Elon Musk and US President Donald Trump in front of a cybertel in the White House (AFP via Getty Images)

Ms Reeves told BBC Radio 4’s Today Program: ‘We do not want to end up in a trade war, but we are looking at the mandate of the zero emission vehicle, namely I think why some of the money is going to Tesla, and see how we can better support the car manufacturing industry in the UK.

“I announced in the budget last year, I think, about £ 2bn for a car fund as part of our modern industrial strategy.

“But look, we are working intensely with the US to come to an agreement before these tariff increases next week. Let’s see how it goes. ‘

A 25 percent tax on vehicles and vehicle parts imported to the US will come into effect on April 2.

Liberal democratic deputy leader Daisy Cooper said: “Our car industry is left at the grace of Trump and his destructive trade war.

“We must prepare to respond if necessary, including by Tesla rates that Trump’s Crony Elon Musk hits in the bag.”

Elon Musk wears a 'Trump was right about everything' hat during an event in the White House — Elon Musk wears a ‘Trump was right about everything’ hat during an event in the White House (Reuters)

Mr. Musk said rates “will” affect the price of parts in Tesla cars coming from other countries, adding that the “cost impact is not trivial”.

This was in response to a post on social media platform X – which he owns – which claims that Tesla ‘can’ most benefit ‘from rates on US imports.

Then Mr. Trump became president in January, he said Mr. Musk appointed as a role that cuts government costs by leading the newly formed Department of Government Efficiency.

Figures of the Association of Car Manufacturers and Dealers show that the Tesla model Y was the fifth most popular new car in the UK in 2024 with 32,862 registrations.

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