The United Kingdom is reportedly moving towards imposing tariffs on Chinese electric vehicles in response to demands from the European Union (EU).
On October 4, The Times reported that the UK government has been preparing to levy tariffs on Chinese electric vehicles, having previously delayed action due to concerns over potential retaliation from China. However, officials now believe that the losses incurred from being excluded from the EU's 'Made in Europe' industrial policy would be far greater.
Currently, the UK does not impose additional tariffs on Chinese electric vehicles, applying only a standard 10% import duty on general automobiles. This contrasts with the United States, which has effectively blocked Chinese cars from its market, and the EU, which imposes tariffs of up to 45% on Chinese electric vehicles.
The EU has expressed concerns that the UK could serve as a bypass for Chinese vehicles entering the European market, leading to demands for the UK to impose tariffs on these imports. The EU has warned that failure to comply could result in UK products being excluded from benefits such as subsidies, tax incentives, and public procurement under the 'Made in Europe' policy.
For the UK, losing competitiveness in its largest market, the EU, could have significant repercussions, especially given the close ties between the UK automotive industry and EU supply chains. In the first half of this year, 58% of the UK's automotive exports went to the EU, while exports to China accounted for only about 4%.
Thus far, the UK government has refrained from accepting the EU's tariff demands due to fears of retaliation from China, as well as the desire to attract local investments from Chinese companies and maintain sales of UK vehicles in the Chinese market.
However, if the UK government changes its stance and imposes tariffs on Chinese electric vehicles, it could pose challenges for Chinese automakers.
Chinese brands such as BYD, SAIC's MG, and Chery have rapidly expanded their market presence in the UK. As of September, Chinese brands accounted for 23% of the UK new car market, nearly one in four new cars sold. Notably, Chery's Jaecoo 7 was the best-selling new car model in the UK last month.
Despite the potential for tariffs, analysts suggest that Chinese companies are likely to continue investing in the UK market rather than withdrawing. Victor Zhang, Chery's UK regional head, stated, "Tariffs may come and go, but they won't change our investment in the UK. We will remain in the UK."
In the EU, Chinese automakers are still expanding their market presence with hybrid vehicles that are not yet subject to tariffs. Some electric vehicles have maintained price competitiveness even after tariffs, and companies like BYD are also establishing local production facilities in Europe to avoid tariffs.
* This article has been translated by AI.
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