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Motorists looking to buy a luxury car face paying thousands more as the global tariff war drives up the cost of prestigious vehicles.
For American drivers, some of the Ferrari cars built in Maranello, Italy, have already become 10 per cent more expensive after Donald Trump imposed higher tariffs against all foreign-made cars.
The concern for luxury-car enthusiasts in the UK and worldwide is that a Rolls-Royce or an Aston Martin could soon become far more expensive to buy if the global trade war is not brought to an end.
Scott Sherwood, an independent analyst of supercars and luxury car brands, said prices of high-end marques will rise for consumers outside of the US since car manufacturers will try to spread the financial hit across their entire market and customer base.
“For customers, it’s inevitably going to lead to higher prices. There is a very high probability of job losses on both sides of the Atlantic,” Sherwood added.
This week, the US president announced a 90-day pause on the so-called “reciprocal” tariffs against its trading partners, with the exception of China. But Trump’s 25 per cent levy on imports of all foreign cars remains in place except for a few exemptions made for Canada and Mexico, as well as for vehicles over the age of 25 years.
Britain’s car industry is heavily reliant on European exports but it is still exposed to the tariffs since around one in six of the cars shipped goes to the US — and it is the largest market for high-end brands such as Jaguar Land Rover, Bentley and McLaren.
The impact for the luxury car segment has been immediate as JLR suspended all shipments of its cars to the US for a month, while Ferrari announced a 10 per cent increase in prices for some of its models. Aston Martin has also said it wants to pass on some of the tariff cost to consumers.
Another UK brand, Morgan Motor, plans to pass on about half of the tariff costs to US consumers, meaning its $85,000 Plus Four model would cost 10 per cent more.
According to the Institute for Public Policy Research, more than 25,000 direct jobs in the UK car manufacturing industry could be at risk if exports to America fall.
Luxury brands have already been taking measures ahead of the tariffs to minimise their impact but the damage will depend on how much pricing power the companies have, their cash position and the ability to cut costs.
People close to Aston Martin said the company had invoiced all stock that landed in the US in March and minimised shipments in April to avoid suspending them. It will also seek higher margins on customisation offers in addition to cutting costs further.
To address its weak cash position, the company also announced plans to raise more than £125mn via the sale of its minority stake in the Formula 1 racing team and additional investment from its chair Lawrence Stroll.
But Aston Martin still expects as much as a £30mn hit to its gross profit as a result of the 25 per cent tariffs. Analysts had been estimating £30mn in earnings before interest and taxes for 2025.
“We anticipated some risks in the plan and built in contingencies,” Aston Martin chief executive Adrian Hallmark said in a recent interview. “This now makes it tighter to hit what we promised but we’re not fundamentally changing our guidance or forecasts as a result of the tariffs.”
Ferrari has told investors that the pricing of Ferrari 296, SF90, and Roma families will remain the same, meaning the company and its dealers are likely to absorb the full tariff cost. But other models are likely to be hit by a 10 per cent price increase.
Still, strong luxury brands such as Ferrari will fare better than others since their customers may be willing to pay 10 per cent more to get hold of their vehicles.
“Does anyone really want a Ferrari that isn’t built in Maranello?,” Sherwood said.
