EU Pushes UK to Raise Tariffs on Chinese Cars as Trade Tensions Grow

Brussels has told British Prime Minister Andy Burnham that Britain would need to raise tariffs on Chinese cars and align more closely with EU trade policy if it wants to avoid restrictions on British goods under the bloc’s proposed “Made in Europe” framework, the Financial Times reported. According to the report, EU officials have also suggested that joining the customs union would resolve many of the difficulties because it would reduce tariff differences and ease fears that Chinese products could enter the European market indirectly through Britain. Reuters said it was unable to independently verify the report, and neither the EU nor the British Foreign Office had immediately commented. Nevertheless, the discussion highlights a widening policy gap between London and Brussels over how aggressively to respond to China’s growing presence in the global automotive industry.

That gap is particularly visible in electric vehicles. Britain currently applies a standard 10% import tariff on passenger cars and has so far avoided the additional anti-subsidy duties adopted by the EU against battery electric vehicles produced in China. In the EU, Chinese manufacturers face company-specific countervailing duties on top of the existing 10% car tariff. BYD is subject to an additional 17%, Geely 18.8% and SAIC 35.3%, while most other cooperating Chinese exporters face an additional 20.7%. The difference has made Britain relatively attractive for Chinese brands at a time when manufacturers including BYD, Chery, Omoda, Jaecoo and Leapmotor are accelerating their European expansion. Industry reporting indicates that Chinese-brand vehicles accounted for more than 15% of UK registrations in the first eight months of 2026, up sharply from around 4% in 2023. If Britain moved closer to EU tariff levels, one of the most open major European markets for Chinese automakers would become materially more expensive.

The issue extends beyond tariffs because Brussels is simultaneously redesigning industrial policy around local production. The proposed Industrial Accelerator Act would introduce “Made in EU” conditions for subsidies, procurement and other government-supported demand in strategic sectors. Under proposals being discussed, electric vehicles used in public procurement could be required to contain at least 70% EU-made components and be assembled within the bloc. Britain fears that exclusion from these rules could weaken its automotive manufacturing base because UK factories remain deeply integrated into continental European supply chains. EU-UK automotive trade is worth roughly €80 billion annually, according to the British industry association SMMT. That creates an unusual tension: Brussels wants to protect European production from Chinese competition, while British manufacturers argue that separating UK factories from EU supply chains could also weaken European competitiveness.

For Chinese automakers, the dispute increases the financial importance of localization. Higher tariffs reduce the advantage created by China’s lower manufacturing costs, while local-content rules increasingly reward companies that assemble vehicles and source components inside target markets. Chinese manufacturers are therefore likely to place greater strategic value on European factories, joint ventures and localized supply chains rather than relying entirely on vehicle exports from China. The tariff divide may also influence product strategy because the EU’s current countervailing measures specifically target battery electric vehicles rather than every type of Chinese-made car, potentially encouraging greater emphasis on hybrids and other powertrains where trade barriers differ. Britain’s eventual decision will therefore matter well beyond its domestic car market: it will help determine whether Europe evolves into a more unified protective trade area or retains significant regulatory gaps that Chinese manufacturers can use to diversify their European operations.