UK Automotive Sector Faces Trade-Off Between China and Europe Over Tariffs
Britain’s car industry faces a difficult trade-off between the Chinese and European markets as manufacturers navigate looming trade measures that could restrict UK exports to the European Union, theguardian.com reported. While the United States has shut out Chinese vehicles almost entirely and the EU has imposed duties of up to 45%, the UK remains an outlier by choosing not to levy import taxes on Chinese cars.
The disagreement centres on conflicting trade policies and industrial pressures.
Ministers Resist Levies Amid Retaliation Warnings
Ministers have resisted calls from Brussels to impose tariffs, citing potential economic repercussions. Business Secretary Jonathan Reynolds argued that any levies would “probably be reciprocated,” which would cost UK manufacturers vital sales in China. Reynolds confirmed that tariffs on Chinese electric vehicles remain under review while the government negotiates UK participation in European industrial programmes.
Tariffs would also raise prices for British drivers who have purchased cheaper Chinese models and could deter foreign investment.
Chinese Brands Drive Sales While Division Deepens
Demand for electric vehicles and Chinese brands powered a 12% rise in British new car registrations in the year to September, according to preliminary data from the Society of Motor Manufacturers and Traders (SMMT) cited by theguardian.com. Brands such as BYD, Omoda, and Jaecoo more than tripled their market share in the first eight months of 2026, capturing 12% of sales. The European Automobile Manufacturers’ Association noted that Chinese-made cars accounted for 14% of British new-car sales in 2025, as reported by the South China Morning Post.
Opinions within the industry remain divided on the necessity of tariffs. Conversely, Victor Zhang, deputy UK chief of Chery, rejected that claim, stating that most imported vehicles are super-hybrids that stay in the UK and that tariffs will not alter the company’s ongoing investment.
Other industry figures argue that protective measures are necessary to prevent the domestic sector from declining. Tim Tozer, a former chair of Vauxhall, told theguardian.com that tariffs are vital to stop Britain’s car industry from atrophying, describing current efforts as the “last knockings now, trying to save the industry.”
Next Steps in UK-EU Trade Negotiations
The UK government continues discussions with Brussels regarding British participation in the European Union’s Industrial Accelerator Act and its proposed “Made in Europe” requirements, which aim to strengthen regional supply chains. Nissan is also exploring a manufacturing arrangement with Chery International UK to produce Chery vehicles at its Sunderland plant starting in the 2027 financial year, subject to ongoing talks. Business Secretary Jonathan Reynolds has not announced a definitive date for a final decision on whether Britain will introduce additional tariffs on Chinese electric vehicles.
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