The UK is reportedly moving towards imposing tariffs on Chinese electric vehicles in response to demands from the European Union (EU).
On October 4, The Times reported that the UK government has been preparing to levy tariffs on Chinese electric vehicles, having previously delayed action due to concerns over potential retaliation from China. However, officials now believe that the losses incurred from being excluded from the EU's 'Made in Europe' industrial policy would be far greater.
The UK is one of the few countries that does not impose import tariffs on Chinese cars. The United States has effectively barred Chinese vehicles from its market, while the EU imposes tariffs of up to 45% on Chinese electric vehicles.
The EU has expressed concerns that the UK could serve as a bypass for Chinese car exports to Europe, prompting calls for the UK to impose tariffs on these vehicles. The EU has warned that if the UK does not comply, British products could be excluded from the 'Made in Europe' policy, which offers subsidies, tax benefits, and public procurement advantages for products made within the EU.
For the UK, losing competitiveness in its largest market, the EU, could have significant repercussions, especially given the close ties between the UK automotive industry and EU supply chains. In the first half of this year, 58% of the UK's car exports went to the EU, compared to just about 4% to China.
Until now, the UK government has refrained from accepting the EU's tariff demands due to fears of retaliation from China, as well as the desire to attract local investments from Chinese companies and maintain sales of British cars in the Chinese market.
However, if the UK government changes its stance and imposes tariffs on Chinese electric vehicles, it could pose challenges for Chinese automakers.
Brands such as BYD, SAIC's MG, and Chery have rapidly expanded their market presence in the UK. As of September, Chinese brands accounted for 23% of the new car market in the UK, nearly one in four new cars sold. Notably, Chery's Jaecoo 7 was the best-selling new car model in the UK last month.
Despite the potential for tariffs, analysts suggest that Chinese companies are likely to continue investing in the UK market rather than withdrawing. Victor Zhang, Chery's UK regional head, stated, "Tariffs may come and go, but they won't change our investment in the UK. We will remain in the UK."
In the EU, Chinese automakers are still expanding their market presence with hybrid vehicles that are not yet subject to tariffs. Some electric vehicles maintain price competitiveness even after tariffs are imposed, and companies like BYD are also establishing local production facilities in Europe to avoid tariffs.
* This article has been translated by AI.
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