Britain’s automotive sector is navigating a complex trade-off between the Chinese and European markets, as manufacturers face potential trade barriers that could threaten their access to the EU. While the United States has largely restricted Chinese vehicle imports and the European Union has implemented duties reaching 45%, the UK remains a notable outlier in declining to impose similar taxes. Even as the US has shut them out almost entirely, and the EU imposes duties of up to 45%, the UK is an outlier in choosing not to put import taxes on Chinese vehicles.
Reports suggest EU officials warned Manchester Mayor Andy Burnham last month that Britain must apply tariffs on inexpensive Chinese cars. Failing to do so could result in Brussels imposing protectionist “made in Europe” barriers on British exports, a move that would significantly impact the UK’s largest automotive trade partner. In the first half of 2026, the EU accounted for 58% of UK car exports, compared with roughly 4% for China. According to the trade body, On Wednesday that the European Commission’s made in Europe rules, which restrict subsidies, tax breaks and public procurement contracts to vehicles built within the EU, pose an existential threat to British car production. Underlining China’s ability to pivot its export efforts when hit by trade barriers, imports of plug-in and battery hybrid cars rocketed after the EU tariffs were imposed on EVs.
Business Secretary Jonathan Reynolds has resisted such measures, expressing concerns that any levies would likely trigger retaliation, harming British manufacturers attempting to sell into China. Furthermore, imposing tariffs could drive up vehicle prices for UK consumers and potentially discourage Chinese companies, such as Chery—which is currently in discussions to manufacture at Nissan’s Sunderland site—from further investment in Britain. But we won’t change our ongoing investment in the UK.”, he added: “Tariffs can come and go. Whose market share in Britain continues to be eroded Chinese firms, others in the industry believe tariffs could help protect the UK’s manufacturers. Trying to save the industry.”, he said: “We are at last knockings now.
Market analysts and industry leaders remain divided on the strategy
Industry Perspectives
- Emily Sawicz, RSM UK: Warned that the UK cannot drift between these markets indefinitely, noting that exclusion from European opportunities poses a threat to domestic suppliers.
- Ian Plummer, Autotrader: Stated that competition from Chinese brands has increased affordability and stimulated new car purchases.
- Tim Tozer, former Vauxhall chair: Argued that tariffs are vital to stop the sector from atrophying, labeling the government’s hopes for sustained exports to China as “whistling in the wind.”
New registration data from the Society of Motor Manufacturers and Traders (SMMT) highlights the shifting landscape. British car registrations rose 12% in the year to September—the strongest annual growth since 2017—partly driven by consumer demand for Chinese models like the Jaecoo 7 and BYD’s Sealion 7. In the first eight months of 2026, brands including BYD, Omoda, and Jaecoo more than tripled their UK market share to 12%.
Despite the growth, concerns over the industry’s future remain central to trade policy debates
Key Stakeholder Comments
- Mike Hawes, SMMT chief executive: Emphasized that because the UK and EU industries are deeply integrated, excluding British vehicles from the European market would cause mutual damage.
- Massimiliano Messina, Nissan Europe chair: Cautioned against Europe becoming a “Trojan horse” for Chinese manufacturers using the UK as an entry point.
- Victor Zhang, Chery deputy UK chief: Rejected claims that his brand is flooding the market, maintaining that their sales are primarily super-hybrids and that investment in the UK remains a priority regardless of tariffs.
Brussels is currently evaluating further trade restrictions, including potential quotas or price floors on hybrid electric vehicles. This follows a 2024 move to raise tariffs on Chinese electric vehicles, which previously led to a decline in their sales trajectory. As the government weighs these competing economic pressures, manufacturers are calling for clear policy direction to inform long-term investment decisions. Triggering a decline in what was then an accelerating sales trajectory, brussels raised its own tariffs on Chinese EVs in 2024.
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