Downing Street has declined to rule out the imposition of tariffs on Chinese-made electric vehicles as part of the Made in Europe package. The stance follows an announcement that Downing Street would welcome the objective to have the country included in the Industrial Accelerator Act, after France dropped its opposition to British participation in the initiative.
The regulatory framework aims to restrict subsidised Chinese imports by granting preferential treatment to European Union-made goods. Both the United Kingdom and nations such as Norway have expressed concern regarding potential disadvantages if they remain excluded from the arrangement. According to a Franco-German proposal, the condition for joining would involve aligning with European Union tariffs on Chinese electric vehicles that were imposed by the bloc in 2024, requiring dynamic alignment with trade defence measures.
The Chinese embassy in London expressed firm opposition to any discriminatory practice involving tariff hikes or restrictive measures directed at Chinese products. Representatives stated that serious concern had been conveyed to the British side regarding recent reports, adding that trade protectionism conflicts with World Trade Organization rules and market principles.
Earlier in the week, Business Secretary Jonathan Reynolds stated he would not face coercion to align with European Union policy. Nevertheless, the government has sought inclusion in the Made in Europe package due to concerns that billions of pounds in automotive trade could be lost if the country remains locked out of European Union supply chains. When questioned on whether the administration accepted the requirement to levy tariffs on Chinese-built vehicles to secure entry into the package, a spokesperson for Downing Street noted it was premature to speculate on the terms of any agreement, adding that a European process remains ongoing. The spokesperson emphasised that the nation maintains its own trade policy, keeps all tariffs under review, and collaborates closely with the domestic automotive sector to ensure interests are reflected.
Interest in Chinese electric vehicles has grown, with BYD sales increasing by 78% year on year in September, Chery rising by 660%, and Changan recording a market share increase of more than 3,000%. European Union lawmakers anticipate finalising the Industrial Accelerator Act, referred to as Made in Europe legislation, by the end of the year or early 2027. Members of the European Parliament have already tabled 5,100 amendments, including one incorporating the United Kingdom.
Earlier in the week, the head of Mercedes-Benz and president of the European car trade body ACEA, Ola Källenius, warned that excluding the United Kingdom from the legislation would constitute a deliberate choice by European Union leaders to harm the bloc's automotive industry. The Franco-German proposal outlines an opt-in mechanism to include European partners that were part of the European Union single market as of 1 January 2020, provided those third countries accept dynamic alignment on conditions related to investments and relevant trade defence measures.
Implementing tariffs could protect domestic manufacturers by preventing lower-priced Chinese models from entering the market, though it might simultaneously raise consumer prices and complicate efforts for manufacturers attempting to export vehicles to China during trade tensions. Approximately 80% of domestically produced cars are exported, with over half directed to the European Union and 6% sent to China.
Trade Minister Anas Sarwar suggested earlier that the country was inclined to align on tariffs, telling media that the United Kingdom and the European Union must act in lockstep to address market dominance by China in the automotive sector. An industry source indicated that the European Union has recently demonstrated the feasibility of dialogue with China to establish safeguards without triggering retaliation.
China opposes the expansion of electric vehicle tariffs, having previously issued warnings regarding potential trade disputes over hybrid vehicle quotas. While quotas can be introduced within months under World Trade Organization regulations, imposing tariffs on cars may require over a year, involving formal notification of investigations, evidence gathering, and analysis of alleged harms to the domestic automotive sector.
Liam Byrne, Labour chair of the parliamentary business committee, stated that levying tariffs on Chinese electric vehicles would represent a small price to pay to protect the industry across both jurisdictions. Speaking at a conference, he asserted that a new strategy regarding China is urgently required to prevent domestic and European manufacturing from declining, while criticising current governmental approaches.
