China says it will retaliate if UK restricts Chinese EVs

The ministry posted the statement on its website as a spokesperson's answer to a reporter's question. It urged Britain to abide by World Trade Organization rules, "think twice before acting, and not dance to the EU's tune," and said China would "closely monitor" UK moves.

The Chinese embassy in London said it was "firmly opposed to any discriminatory practice involving tariff hikes or restrictive measures on Chinese products" and had expressed "serious concern" to the UK side. It said trade protectionism runs counter to WTO rules and market principles.

The warning followed remarks by trade minister Anas Sarwar on 15 October at the German-British Business Summit at Mansion House in London. He told Politico that Britain and the EU should "work together and act in lockstep" to address China's dominance in carmaking. Asked whether Britain was considering tariffs on Chinese EVs, he said discussions with European partners were continuing, without giving a rate or a timetable.

Downing Street said it would "welcome the objective to have the UK included in the Industrial Accelerator Act" after France dropped its opposition to Britain joining the scheme. Asked whether the UK accepted it would have to tariff Chinese cars to join, a spokesperson said it was "premature to speculate" on the terms of any deal. The same Downing Street spokesperson said the UK "keeps all tariffs under review" and works with the British automotive sector.

The EU condition

The Industrial Accelerator Act, also called Made in Europe, would reserve certain public procurement and subsidies for products with 70% of their content from inside the bloc. A Franco-German proposal tabled on the night of 15 October would admit European partners that were in the single market on 1 January 2020, naming the UK and Norway. The condition is dynamic alignment with EU trade defence measures, so the UK would track future EU changes rather than fix a rate once.

Alignment would mean matching duties the EU set in 2024. The EU imposed definitive countervailing duties on Chinese battery-electric vehicles for five years in October 2024, ranging from 7.8% to 35.3%. With the standard 10% import levy, the maximum combined rate is 45.3%, more than four times the 10% tariff Britain still applies to China-made cars of all types. Britain did not follow the EU in 2024 and remains the largest European market without extra duties on Chinese EVs.

What the tariffs would touch

Chinese brands accounted for 81,776 of the 350,536 cars registered in the UK in September, or 23.3%, up from 12.4% a year earlier, according to a tally of SMMT marque data. SMMT's breakdown showed BYD second among all brands with 20,129 registrations, up 80%, and the Chery group third with 32,823 across Chery, Jaecoo, Omoda and Lepas, up 171%. MG added 18,026. The three largest Chinese groups alone registered nearly 71,000 cars in a month when the whole market grew 12.1%.

About 80% of UK-made cars are exported, more than half to the EU and 6% to China. The Guardian reported that tariffs could harm British manufacturers selling to China if the dispute escalates.

UK preparation and JLR risk

The Times reported on 4 October that Business Secretary Jonathan Reynolds was drawing up a package of potential tariffs and that ministers were ready to match the EU's levy of up to 45%. Reuters carried the report on 5 October. A government spokesperson told Reuters no tariffs had been imposed and that it continued to engage closely with industry. No rate was published.

UK officials were concerned about Chinese retaliation against Jaguar Land Rover but judged the fallout from being dropped from Made in Europe to be far more damaging, the Times said. China has not named targets for any countermeasures.

Reynolds had argued the other way in September, telling Politico that Britain's sector was "export-orientated" and that "you always have to take heed of retaliatory action if you put tariffs in place." By late September he said the tariff question was under review "more closely than lots of other issues" and that different parts of the sector wanted different things.

JLR's China wholesales fell 46% to 6,100 vehicles in the quarter, while group wholesales rose 24.5% to 82,400, according to Univest. Retail volumes fell about 7.5% to 79,000, which Univest said meant the wholesale rise reflected inventory rebuilding.

Ola Källenius, the Mercedes-Benz chief executive and president of the European car trade body ACEA, said locking the UK out of the legislation would amount to a "deliberate choice" by EU leaders to "hurt" the car industry across the bloc.

What happens next

EU lawmakers are expected to finalise the Industrial Accelerator Act by the end of the year or early 2027. MEPs have already tabled 5,100 amendments. A separate deadline follows on 1 January 2027, when stricter battery rules of origin under the UK-EU trade agreement would put a 10% tariff on most electric cars traded between the two sides unless delayed. London is working with the European Commission to avoid that.

Before that, the European Commission plans an annual cap of 350,000 Chinese hybrid vehicles from December 2026, cutting China's share of the EU hybrid passenger car market from 6% to 3%. No UK rate, timetable or decision has been published.