Britain's car industry will suffer a “devastating double blow” this week with manufacturers hit by President Trump’s 25% tariffs and Rachel Reeves’s “jobs tax”. The “one-two punch” will leave carmakers worse off by £2.1billion every year, Conservatives have calculated.

They claim the increase in National Insurance contributions will “hammer” the sector by £200million just as international competition intensifies. There are fears plants will close and surviving workers will be hit with wage cuts unless the UK can secure a free trade deal with the United States.

The warning comes as Jaguar Land Rover has said it will “pause” shipments to the US. Sir Keir Starmer is expected to relax rules on electric car sales this week to help the sector survive the tariffs which came into force on Thursday.

Shadow Business and Trade Secretary Andrew Griffith said: “This week lays bare two of Labour’s worst blunders: failing to fix our US trade relationship and slamming businesses with a punishing jobs tax. British firms are already on their knees — now Labour delivers a one-two punch that could flatten them.

“They don’t understand that it’s business, not big government, that drives growth. If they don’t reverse course fast, working people will pay the price.”

Tories say the tariffs and tax hike amount to a “devastating double blow” and have attacked the Sir Keir Starmer for using his “supermajority” to force through the employers’ National Insurance contributions increase.

Shadow Chancellor Mel Stride urged renewed action to get a deal in place with the United States, saying: “[What] we’ve got to do as a country is to get in and negotiate that free trade with America so we can get a carve out from that and really spare ourselves the effects of that. And that’s where I think the Government should have moved more quickly in terms of getting into the room and hammering out a deal, so they’ve really got to step up now and get that done.”

According to a Tory analysis, there are more than 198,000 people employed in the automotive manufacturing sector and wages are around 13% higher than the UK average.

Concerns about the impact of the National Insurance increase go far beyond the manufacturing sector.

The British Retail Consortium warned that the increase in NICs, when combined with the rise in the National Living Wage, has forced up the cost of employing people in entry level jobs by more than 10%.

It expects the two changes to cost the sector more than £5billion a year, rising to £7billion when a new “packaging tax” comes into force in October.

The BRC warns 160,000 part-time retail roles – more than 1 in 10 – are at risk of being lost in the next three years.

Helen Dickinson, the industry body’s chief executive, said: “The Chancellor’s October Budget is now hitting retailers with an extra £5billion on their employment bill. When coupled with the new packaging tax in October, retailers’ costs will have spiralled by £7bn in a single year. Given slim retail margins of just 2-4%, these additional costs mean higher prices, fewer jobs and fewer stores. A recent survey of retail finance directors showed that half were planning to reduce hours and workers as a direct result of the employer NIC hike.”

Warning it will be “part-time jobs which take the biggest hit,” she said: “While the cost of employing someone in a full-time entry-level position rose by over 10%, for a part-time worker it is over 13%. Part-time retail jobs hit their lowest level since records began in 1996, and have fallen by 200,000 in the last seven years.”

She added: “While the Government’s welfare reforms aim to increase the numbers in work, this week’s cost increases will kick away the ladder for many who are just getting their first foothold.”

The Government says its Budget decisions were necessary to “stabilise the public finances” and its action on the NHS has resulted in falling waiting lists. It insists it is now focused on “creating opportunities for businesses”.