President Trump has announced a 25% tax on all car imports and car parts to the US - they're due to come on 2 April along with tariffs on many other goods in what Trump is calling "Liberation Day".
Rachel Reeves says the UK won't impose retaliatory tariffs yet, in hopes of a deal being struck between the two countries.
Niall Paterson talks to Professor David Bailey about how British car companies will be affected, and also to economics and data editor Ed Conway on the wider implications of a potential trade war for the UK economy.
Producer: Natalie Ktena
Editor: Wendy Parker