Reynolds says UK will base Chinese EV tariff decision on national interest

Reynolds sets UK interest test

Reynolds told the Guardian that any trade defence tariff decision in relation to the EU would be based on UK interest, "not based on any other country asking for that." He did not rule out higher duties at some point in future. He said the issue was kept under review depending on what the needs of industry are.

Britain charges only its standard 10% duty on cars built in China, whether electric or not. EU duties range from 7.8% to 35.3% on top of the EU's standard 10% import duty, making a total of up to 45.3%. The Times reported that ministers were ready to match the EU's 45% levy to avoid damage from Made in Europe rules. Reuters said it could not immediately verify the report.

A government spokesperson said no tariffs have been imposed on Chinese EVs. "We continue to engage closely with industry so that our approach reflects the sector's and UK's national interests," the spokesperson said.

Nearly a quarter of cars sold in the UK in September were Chinese models, and the Jaecoo 7 was the best-selling car that month with more than 10,800 registrations, according to SMMT figures cited by Carwow. Britain has so far avoided the additional tariffs imposed by the US and EU.

David Bailey, professor of business economics and industrial policy at the University of Birmingham, told the Mirror that tariffs would slow Chinese brands' advance rather than stop it. "It's not the end of the boom, but potentially the end of the easy ride," he said. Manufacturers may absorb much of the cost to protect market share, he added, so buyers could see a squeeze rather than a dramatic price jump.

EU pressure and export stakes

The Financial Times reported in September that Brussels had urged Britain to align more closely with EU trade policy and raise tariffs on Chinese cars if Britain wants to avoid barriers under the Made in Europe rules. Those rules favour European-made goods. Carwow reported that the EU accounted for around 58% of British car exports in the first half of the year.

The SMMT says the UK-EU automotive relationship is worth about €80bn a year. It also estimates that UK automotive production supports €24bn of economic activity and 250,000 jobs across the EU.

Reynolds has said the UK automotive sector is export-led, and that he must weigh the effect of any tariff decision on Britain's export markets and the possibility of retaliation. Britain exported 35,000 cars to China last year, its third-biggest export market after the EU and the US, the Guardian reported. The government wants a deal with the EU that would keep UK-made cars out of European tariffs. EVs made in Britain and exported to Europe are likely to be hit by EU tariffs at the start of next year under Made in Europe rules. Those rules require the majority of the car to be sourced in Britain or Europe. Many manufacturers import batteries from China. Reynolds has been discussing the issue with EU counterparts.

No decision on UK tariffs has been announced.