UK car industry faces trade crossfire over Chinese EV tariffs

The UK car industry is caught in an uncomfortable squeeze between Brussels and Beijing.

EU officials have warned that Britain must impose tariffs on cheap Chinese imports or face protectionist barriers on its own car exports to Europe. The warning, delivered to Greater Manchester Mayor Andy Burnham, presents a stark choice for British ministers who have so far resisted taxing Chinese vehicles.

Currently, the UK is an outlier. While the US has effectively shut out Chinese electric vehicles and the EU has introduced duties of up to 45%, Britain has kept its market open.

But maintaining this neutral stance could prove ruinous for domestic factories. The EU is the British car industry’s lifeblood, taking 58% of all UK car exports in the first half of this year. By contrast, China accounted for just 4%. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), warned that excluding British-made cars from their biggest market would guarantee "mutual damage".

The Trojan horse threat

The EU’s threatened "made in Europe" rules would restrict subsidies, tax breaks, and public contracts to vehicles built within the bloc. European manufacturers are worried about back-door competition. Massimiliano Messina, Nissan’s chair in Europe, warned that the continent "cannot have a Trojan horse where the Chinese are going to flood the market through the UK."

On the other side of the ledger, Business Secretary Jonathan Reynolds fears that imposing tariffs would trigger retaliatory taxes from Beijing, harming the few UK exports that do go to China.

Taxes would also raise prices for British buyers, who are currently embracing cheap Chinese models. Brands like BYD, Omoda, and Jaecoo tripled their share of the UK new car market to 12% in the first eight months of 2026. Vehicles like the Jaecoo 7—which has been widely dubbed the "Temu Range Rover" because of its bargain price and blocky styling—and BYD’s Sealion 7 helped push overall British car registrations up 12% in September, marking the best month for annual growth since 2017.

Investment versus protection

There is also the threat to foreign investment. Chery, the Chinese giant that owns Jaecoo and Omoda, is in talks to build cars at Nissan’s Sunderland plant. Victor Zhang, Chery’s deputy UK chief, rejected the "Trojan horse" label, saying that most of what they sell in the UK are hybrids rather than pure EVs, and that "the cars we sell here stay here." He insisted that tariffs would not derail Chery's investment plans.

Yet some industry insiders argue that tariffs are the only way to save British car manufacturing from a slow death. Tim Tozer, former chair of Vauxhall, described tariffs as "vital" to stop the sector "atrophying". He dismissed hopes of maintaining major exports to China as "whistling in the wind," arguing that Chinese buyers have become fiercely loyal to their own high-quality domestic brands.

With the stakes so high, Emily Sawicz of the consultancy RSM UK warned that the government "cannot afford to drift between the two indefinitely." Carmakers need a clear direction, she said, if they are to make long-term investment decisions.