UK weighs Chinese EV tariffs as talks with Brussels continue

UK Business and Trade Secretary Jonathan Reynolds says his department is keeping tariffs on Chinese-made electric vehicles under particularly close review as the government negotiates with Brussels over participation in the EU's new "Buy European" industrial initiative. Speaking during an interview at the Labour Party conference in Liverpool, Reynolds said different segments of the UK's automotive sector want different outcomes from government policy on the issue.

Brussels seeks higher tariffs

According to earlier reporting, the European Union has asked Britain to raise tariffs on Chinese EVs as a condition for advancing talks on joining the industrial program. EU officials are concerned that without matching tariffs, the UK could become an entry point for Chinese vehicles into the European single market. The bloc introduced double-digit tariffs on Chinese EV imports in 2024 and is now drafting legislation that would bar foreign manufacturers from accessing subsidies, tax breaks and public procurement contracts.

Diverging calculations

Reynolds said the UK's reasoning differs from the EU's because Britain's auto sector is heavily export-oriented, meaning the government must weigh the risk of retaliation before imposing new tariffs. He described the UK's overall position as "finely balanced." He argued that excluding Britain from the new program would not serve Europe's own interests, noting that the UK, as Europe's second-largest economy, should logically be part of an initiative meant to build resilience against pressure from both the United States and China.

Trade implications

The British auto industry group SMMT has warned that cutting UK supply chains out of the program could cost the EU side up to €24 billion in economic activity. Reynolds also said he remains open to Chinese EV manufacturers establishing production bases in the UK; in June, Nissan agreed to let Chinese EV maker Chery use a production line at its Sunderland plant. The disagreement between London and Brussels risks delaying a planned summit meant to conclude broader trade talks later this year.