UK reviews Chinese EV tariffs amid EU trade talks

U.K. Business Secretary Jonathan Reynolds is keeping tariffs on Chinese electric vehicles "under review" as the nation seeks to be included in the European Union's "Buy European" industrial program. The EU has requested that the U.K. raise its tariffs on Chinese EVs to facilitate discussions, driven by concerns that Britain could serve as an entry point for Chinese vehicles into the EU's single market.

During an interview at The POLITICO Pub at the Labour Party conference, Reynolds indicated that the issue of tariffs on Chinese EVs is being examined "more closely than lots of other issues," acknowledging that "different parts of our own sector want different things from" the government's policy. EU capitals are currently deliberating whether U.K. auto exports should receive preferential treatment under the "Buy European" program, which aims to shield member economies from U.S. tariffs, China's manufacturing strength, and subsidized Chinese EVs.

Reynolds emphasized that the U.K. government's approach to tariffs differs from the EU's, noting that as an "export-orientated sector," the U.K. must avoid actions that jeopardize its export markets and consider potential retaliatory measures. He described the U.K.'s stance as "finely balanced."

The "Made in Europe" initiative is intended to enhance European industrial resilience and autonomy against significant pressures from both the U.S. and China. Reynolds argued that the U.K., as Europe's second-largest economy, should be part of this effort. Non-U.K. goods moving from Britain to the EU currently face applicable tariffs, though Reynolds has expressed openness to Chinese EV manufacturers establishing operations in Britain. Chinese firms, such as Chery, have shown interest in the U.K. as a manufacturing base, with Nissan entering into a memorandum of understanding for Chery to potentially use a production line at its Sunderland factory.

The British SMMT automotive lobby has warned that excluding U.K. supply chains from the "Made in Europe" program could result in approximately €24 billion in lost economic activity for the EU alone. Restrictions could also affect Britain's chemical and energy supply chains. This trade dispute between London and Brussels over the U.K.'s integration into European supply chains may delay a significant summit intended to conclude discussions on various trade matters later this year. Reynolds also highlighted that "constitutional questions" surrounding the U.K.'s relationship with the EU are creating "uncertainty" for businesses.