The United Kingdom is preparing options for tariffs on Chinese-built EVs, The Times reported on Sunday, a shift that would end Britain’s position as the largest European car market without extra duties on Chinese EVs and one the government has not confirmed.
Business Secretary Jonathan Reynolds is drawing up a package of potential tariffs, and ministers are prepared to match the European Union’s levy of up to 45%, according to the newspaper, which cited senior government sources.
“We continue to engage closely with industry so that our approach reflects the sector’s and UK’s national interests,” a spokesperson told Reuters.
Ministers believe any decision should rest on Britain’s national interest and not on automatically following the EU, The Times reported, citing the same sources. No rate, timetable or legal route has been announced.
Where the Tariff Stands
Britain charges its standard 10% import duty on cars built in China, electric or not.
The EU has since October 2024 added countervailing duties of 7.8% to 35.3% on Chinese-built EVs, varying by manufacturer, which takes its highest rate to 45.3%.
That top rate applies to SAIC and to carmakers that did not cooperate with the investigation, while BYD pays a combined 27%.
Matching the EU could therefore mean different rates for different manufacturers, and The Times report does not say which.
The United States charges about 100%.
The EU rates followed a formal anti-subsidy investigation by the European Commission in late 2024.
Britain has opened no equivalent investigation, and its government has not said whether any new duty would follow one by the Trade Remedies Authority or be set by another route.
Pressure From Brussels
The reported shift follows a demand from the EU.
Brussels has pressed Britain to raise tariffs on Chinese vehicles, the Financial Times reported in late September, citing people familiar with the discussions.
The request is tied to the EU’s Industrial Accelerator Act, whose “Made in Europe” rules would reserve subsidies and public procurement for vehicles with 70% of their content from inside the bloc.
As a non-member, Britain risks being shut out, and Brussels fears Chinese cars could reach the continent through the UK.
Burnham said in September that he would argue for Britain to be treated as a “trusted partner” under the rules.
British participation is a sticking point before a UK-EU summit next month, according to The Times.
“A customs union would solve most of the problems of ‘made in Europe’, and also the question of tariff differences, which leads to fears the Chinese could avoid our tariffs by routing through the UK,” an EU official told the Financial Times.
The stakes for British factories are large.
The EU took 58% of UK car exports in the first half of the year, and China about 4%, according to industry figures.
UK car production supports 24 billion euros ($26.9 billion) of economic activity in the EU, according to an Oxford Economics study commissioned by the Society of Motor Manufacturers and Traders.
“The EU is rightly focused on strengthening its industrial base, but the UK remains fundamental to Europe’s automotive ecosystem and is therefore essential to that ambition,” said Mike Hawes, the trade body’s Chief Executive.
A separate deadline adds to the pressure.
Stricter battery rules of origin under the EU-UK trade agreement take effect on January 1, 2027, and would put a 10% tariff on most electric cars traded between the two unless they are delayed.
A Minister Who Argued Against
Reynolds has until now resisted.
He said in mid-September that Britain had no plans to raise tariffs, pointing to the country’s dependence on exports and the risk of retaliation.
“The Chinese economic model produces things at incredible cost, and there is a lot of innovation there,” he said.
By the Labour Party conference in Liverpool on September 28, his language had moved.
Tariffs on Chinese EVs were “under review, to be frank, more closely than lots of other” issues, Reynolds said, calling the decision “finely balanced.”
“You shouldn’t do anything that risks your export markets,” he added.
He has also argued that any levies would “probably be reciprocated,” The Guardian reported.
The risk on the other side is retaliation. After the EU imposed its duties, China opened trade investigations into European brandy, pork and dairy.
The main objection inside government has been the risk to Jaguar Land Rover, which sells into China, according to The Times.
The newspaper said the company sold 62,400 cars there in its last financial year, down from a peak of 146,000 in 2017, and that the government now believes “the balance has shifted” because of the cost of exclusion from the EU scheme.
Chinese Brands’ Rising Share
The debate has sharpened as Chinese brands have taken British sales at a pace not seen elsewhere in Europe.
Chinese-badged brands held 16.5% of the UK market in June, almost double their share a year earlier, according to SMMT data.
New car registrations rose 12.1% in September to 350,518, the strongest September since 2017 and a 10th consecutive month of growth, according to preliminary SMMT figures.
The trade body said the growth is “largely being driven by intense competition – significantly from new entrants – increased choice and attractive deals.”
Its statement did not name China.
Chinese brands took more than 27% of registrations in the month, up from about 17% a year earlier, and more than 25% across the third quarter, according to a count by brand origin of SMMT data from the data site electricnick.
Other published counts put the September share nearer 23%.
Broker News, also using SMMT data, put Chinese-owned brands at 27.5% in September and at more than 21% for the first nine months, which makes the plate-change month a peak and not the run rate.
The Jaecoo 7, built by Chery, was the country’s best-selling car that month with 10,813 registrations, ahead of the TeslaModel 3 at 9,929.
The MG HS ranked ninth with 5,444.
The Jaecoo 7 is sold in Britain with petrol and plug-in hybrid powertrains, and the EU’s extra duties apply only to battery electric cars.
The government has not said whether any British measure would reach hybrids.
Among battery electric cars, the BYD Sealion 7 was the best-seller after Tesla’s Model 3 and Model Y, according to the SMMT.
Battery electric registrations rose 36.3% to a record 99,199, a 28.3% share of the market, while plug-in hybrids climbed 55.7% to 59,563.
The fully electric share for the year to date stands at 26.2%, short of the 33% that the zero-emission vehicle mandate requires this year.
Chinese brands’ share of EU registrations was a little over 9% in the first half.
“The UK, which in the past was a very profitable, very strong market, has become like China,” Hyundai CEO Jose Munoz said in September.
“All the top sellers are Chinese because there are no barriers,” he added.
Nissan, which builds cars in Sunderland, has pressed the government to act.
“The whole UK has to adjust some of their tariff policy,” Massimiliano Messina, the company’s regional Chairperson, told the Financial Times.
What Britain Has Done Instead
The government has so far used subsidy rules to favour cars built outside China.
Its Electric Car Grant, worth up to £3,750 ($5,000) a vehicle, is limited to manufacturers that meet carbon standards for production, which has so far kept Chinese-built models such as those of BYD and MG from qualifying.
That has not slowed them.
BYD’s UK sales nearly doubled in the first half to 37,795 vehicles.
Chinese carmakers are also moving toward British production, which a tariff on imports would encourage.
Nissan signed a non-binding agreement in June to explore building Chery vehicles at Sunderland, where the plant has been running at about half its capacity, according to the Financial Times.
Others intend to keep importing. Leapmotor, which is adding production inside the EU, has said the UK will continue to receive cars built in China.
A British tariff would change that calculation, though by how much depends on a rate the government has yet to name.
