The review comes as the EU pushes for a level playing field under the "Made in Europe" legislation, officially known as the Industrial Accelerator Act. The UK is currently an outlier among major Western economies in not applying import taxes on Chinese vehicles. The US has largely shut them out, while the EU has levied tariffs of up to 45% on Chinese cars since October 2024.
A government source pointed to comments from Business Secretary Jonathan Reynolds last week, who said tariffs on Chinese electric vehicles were "always kept ... under close review." If imposed, the move would mark a break from the previous policy of the Keir Starmer government, which viewed China as an important source of economic growth rather than a risk to British manufacturing.
The UK has argued it does not need trade barriers because it does not face the same trade deficit with China as the EU, which is now running at more than £1bn a day. However, the EU believes tariffs are necessary for the UK to qualify for inclusion in the Industrial Accelerator Act, which would require manufacturers to procure components from Europe to protect against Chinese dominance in supply chains, particularly in autos and chemicals.
Imposing tariffs would likely provoke a hostile response from Beijing and could test Prime Minister Andy Burnham's push for a post-Brexit reset with the EU. It would also require a lengthy World Trade Organization process; the EU took 13 months from launching an investigation to imposing tariffs.
The EU Trade Commissioner, Maroš Šefčovič, is visiting Beijing this Wednesday for talks over a reset in trade relations.