UK may impose tariffs on Chinese EVs as pressure to align with EU grows: Report

Britain is weighing tariffs on Chinese electric vehicles as it faces a difficult choice between protecting its car industry from rising Chinese competition and keeping access to its biggest export market, the European Union.

Business Secretary Jonathan Reynolds is drawing up a package of potential tariffs on Chinese vehicle imports amid concerns that Chinese manufacturers are selling state-subsidised cars in Britain, The Times reported, citing senior government sources.

British ministers are considering tariffs of up to 45 per cent, broadly matching the duties imposed by the European Union on Chinese electric cars, according to the report.

However, the UK government has not confirmed any such move. A government spokesperson told Reuters that no tariffs had been imposed on Chinese EVs.

“We continue to engage closely with industry so that our approach reflects the sector’s and UK’s national interests,” the report said.

Why Britain is under pressure

Britain is one of the few major Western markets that has not imposed additional tariffs on Chinese vehicles. The US has largely shut Chinese EVs out through steep tariffs, while the EU has imposed duties of up to 45 per cent.

Brussels is now pushing Britain to align more closely with its trade policy. EU officials have reportedly warned that failure to impose tariffs on Chinese vehicles could expose British exports to proposed “Made in Europe” rules.

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The proposed rules would favour goods produced within the EU in areas including subsidies, tax incentives and public procurement. British automakers fear this could make UK-built vehicles less competitive in their biggest export market.

The EU accounted for 58 per cent of UK car exports in the first half of 2026, compared with about 4 per cent for China, according to industry figures cited by the Guardian.

The Society of Motor Manufacturers and Traders has warned that the proposed EU rules could pose a major threat to British car production.

“The UK and EU automotive industries are deeply integrated, so effectively excluding British-produced vehicles from their largest market would assure mutual damage,” SMMT chief executive Mike Hawes said.

Chinese carmakers gain ground

At the same time, Chinese manufacturers are rapidly increasing their presence in Britain.

BYD, Omoda and Jaecoo more than tripled their combined share of the UK new-car market in the first eight months of 2026 to 12 per cent, according to industry figures.

British new-car registrations rose 12 per cent in the year to September, preliminary SMMT data showed. Demand for electric vehicles and Chinese brands helped drive the increase, with the Jaecoo 7 and BYD Sealion 7 among the stronger-selling models.

The growing competition has also benefited consumers through lower prices, according to AutoTrader commercial director Ian Plummer.

Competition from Chinese brands has “made cars more affordable” and encouraged more consumers to buy new cars, he said.

That means tariffs could have a direct impact on British consumers by making some Chinese models more expensive.

Investment at stake

Chinese manufacturers are also becoming potential investors in Britain’s automotive industry.

Chery, which owns the Omoda and Jaecoo brands, has been in talks to build vehicles at Nissan’s Sunderland plant. Victor Zhang, Chery’s deputy UK chief, said tariffs would not change the company’s investment plans.

“Tariffs can come and go, but we won’t change our ongoing investment in the UK,” he said.

The potential measures therefore present a difficult trade-off for Britain’s car industry.

Emily Sawicz of consultancy RSM UK said Chinese investment could provide a “lifeline” for British manufacturers, while access to European markets was crucial for smaller companies.

“Manufacturers need clarity on which direction the government intends to take so they can make long-term investment decisions,” she said.

Reynolds has previously warned that tariffs could be reciprocated by China, potentially hurting British manufacturers that export vehicles to the Chinese market.

EU tariffs have changed Chinese exports

The European experience also shows how Chinese manufacturers can adapt to trade barriers.

The EU imposed additional tariffs on Chinese electric vehicles in 2024. Chinese manufacturers subsequently increased exports of plug-in and battery hybrid vehicles into the bloc.

Brussels is now facing calls for additional barriers on hybrid imports, including possible quotas or price floors.

Some British industry figures believe tariffs are nevertheless necessary to prevent domestic manufacturers from losing further market share to Chinese competitors.

Tim Tozer, a former chair of Vauxhall, said tariffs were “vital” to prevent Britain’s car industry from shrinking further.

The government has yet to announce whether it will impose tariffs or what rate would apply.