The UK is contemplating the imposition of tariffs on Chinese car imports as part of efforts to align with the EU and bolster its case for inclusion in new legislation aimed at protecting European manufacturing sectors, including autos and chemicals.
Context
This consideration comes as the EU has raised the issue of tariffs with the UK during discussions regarding the forthcoming "Made in Europe" legislation, also known as the Industrial Accelerator Act. Currently, the UK stands out for not imposing import taxes on Chinese vehicles, unlike the US, which has largely excluded them from its market.
Developments
Brussels believes that the UK must introduce tariffs to create a level playing field and qualify for inclusion in the scheme, especially since the EU has levied tariffs of up to 45% on Chinese cars since October 2024. Implementing such tariffs could provoke a negative reaction from Beijing and challenge Andy Burnham's aspirations for a reset in the post-Brexit relationship with the EU. Furthermore, it would necessitate a lengthy process with the World Trade Organization (WTO). The EU took 13 months to impose tariffs following an investigation into state subsidies affecting production and transport lines.
The UK has been actively lobbying for inclusion in the upcoming legislation, which mandates that manufacturers source components from the continent to mitigate the growing influence of China in supply chains, particularly in the auto and chemicals sectors. If tariffs are enacted, it would mark a significant departure from previous government policy. Under Keir Starmer, the government had positioned itself as a strong ally of China, viewing it as a vital source of economic growth rather than a threat to British manufacturing.
