TurningCircle
1 October 2026updated 09:13

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Policy

The Chinese EV Tariff Question Britain Hasn't Answered

The EU puts up to 45.3% duties on Chinese electric cars. Britain charges 10% and takes the cars. That split is now one of the biggest price questions in the UK market.

By The TurningCircle Team 4 min read

When the EU decided to tax Chinese electric cars, Britain declined to follow. Two years on, the split is one of the defining facts of the UK car market: Chinese brands now sell close to one in six new cars here, most buyers have noticed the prices, and the government has said openly that it does not want to change that. Nothing in the rules is changing. But the question is not going away, and for anyone shopping for a cheap electric car, it sits directly under the price sticker.

Two different answers to the same question

Start with what Brussels did. Following an anti-subsidy investigation opened in October 2023, the European Commission imposed definitive countervailing duties on battery electric cars from China from 30 October 2024, set out in Implementing Regulation 2024/2754. The additional duties range from 7.8% for Tesla's Shanghai-built cars to 35.3% for SAIC, the group behind MG, with BYD at 17.0% and Geely at 18.8%. Those stack on the EU's standard 10% car import duty, so the total burden on some imported Chinese EVs reaches 45.3%.

Britain's answer was simpler: the standard 10% import duty, and nothing on top. UK buyers can buy a Chinese-built electric car without paying a penny of the extra duties that apply a few miles across the Channel, and the market response has been emphatic. The AA's quarterly index found Chinese brands took 15.8% of the UK new car market in August, almost three times their 5.5% share a year earlier. It is no coincidence that the new-EV price premium is falling, from 26% in Q2 to 25% in Q3 by the AA's basket: that is what a wave of aggressively priced competition does.

What the government has actually said

The official position is a refusal to follow, stated openly. Speaking at the McLaren factory in Woking on 16 September, business secretary Jonathan Reynolds warned that Britain cannot risk tariffs on Chinese electric cars, because Beijing would retaliate against UK exports. "The UK automotive sector is in a different position to Europe as a whole because we are an export-led sector," he said, naming Jaguar Land Rover's US and Chinese sales as the exposure. His summary of the trade-off was blunt: "If you put trade protections up, you've got to understand that they'll probably be reciprocated and you'll lose out."

The most concrete thing the government has done is the opposite of a tariff. In June, Nissan signed a non-binding agreement with Chery to study manufacturing Chery's UK passenger vehicles at Sunderland from financial year 2027, using capacity freed up when the old Leaf line consolidated. A Chinese brand's cars rolling out of Britain's biggest car plant would make the UK not just an open market for Chinese EVs but a maker of them. Chery has since doubled down, confirming a UK R&D centre at UTAC Millbrook in Bedfordshire, with UK manufacturing to follow, according to Chery International UK chief executive Gary Lan.

Why drivers should watch this

The reason to care is money. The tariff gap is a large part of why a Chinese-built EV can be priced several thousand pounds below an equivalent European one in a UK showroom, and why brands such as MG, BYD and Omoda Jaecoo have climbed the sales charts so fast. Any move to match EU duties would land on exactly the cars that have been dragging the new EV price premium down. A 17% to 35.3% additional duty does not simply absorb into margins; history from other tariff episodes says most of it reaches the sticker price eventually.

There is a counterweight worth stating honestly: the Sunderland possibility. If Chery production goes ahead at Nissan's plant, some Chinese-brand cars sold in Britain would be built here, paying no import duty at all, and tariffs on imports would even nudge that decision along. Trade protection and domestic production are not opposites; they can be the same policy read from two angles.

The second counterweight is Europe itself. The EU's "Made in Europe" industrial policy, which we looked at in our piece on the UK manufacturing stakes, may end up caring a great deal about where a car's value comes from, not just where it is bolted together. Rules of origin for EU-UK car trade tighten from 2027, requiring a rising share of European content for tariff-free access. A British-built Chery using Chinese battery cells would face exactly that question on its way to EU showrooms.

The honest read

Britain chose cheap electric cars over tariffs, and so far the choice has delivered exactly what it promised: the fastest price competition in the market, the fastest-rising brands, and a shrinking premium on going electric. It has also left the UK out of step with its largest trading partner on one of the biggest trade questions of the decade, with a business secretary who has explained exactly why he plans to keep it that way. But if you are weighing a Chinese-brand EV against a European one, the honest note is that the price gap you are looking at is partly a policy decision, and policy decisions can change.

Sources