British government is considering tariffs on Chinese electric cars

The British government is considering imposing tariffs on Chinese electric cars after the Brussels EU Commission put pressure on London and the domestic car industry also changed its position. According to a report in The Times newspaper, Business and Trade Minister Jonathan Reynolds is currently drafting options for various tariff surcharges.

These could be based on the so-called EU countervailing duties that have been in place for two years, which amount to up to 35 percent for different electric car brands from China. Together with the regular import tariff, the tariffs would rise to 45 percent. There were already media reports in September that Brussels was urging Prime Minister Andy Burnham to align more closely with EU customs policy.

The reason for the surcharge is that Beijing is subsidizing Chinese car companies. These would therefore “flood” the British market with cheap models. Brussels fears that Great Britain will become a “gateway” for subsidized electric cars from China into the EU market.

The EU has made it clear to London that Britain could be excluded from the planned “Made in Europe” strategy if it does not take action against China's car offensive. Continental Europe is by far the most important market for cars made in the UK.

In the future, the European Union wants to link funding bonuses and tenders more closely to whether products were manufactured in the EU. This is particularly about electric cars. The big question is whether “Made in EU” excludes all third countries or whether trading partners such as Great Britain or Canada are treated equally with the EU states. The offer to Britain is to join a kind of club of “trusted partners” that coordinates its China policy. However, what exactly this should look like is still completely unclear.

So far, London – unlike Brussels and Washington – has not levied any tariff surcharges on Chinese cars. But the mood is changing. This is helped by the fact that China's car brands are currently rapidly expanding their market shares in the United Kingdom. In September, almost a quarter of the 350,000 new cars came from China, new figures from the industry association SMMT showed on Monday.

New sales rose significantly that month, but so did the Chinese market share. Chery Automobile's compact SUV Jaecoo 7, a hybrid vehicle, took the top spot as the best-selling car with almost 11,000 new registrations. When it comes to pure electric cars, Tesla models continue to dominate, but the Chinese electric cars from BYD are catching up.

So far, the London government has been against higher tariffs because it feared retaliatory tariffs from Beijing. These would affect, for example, Jaguar Land Rover, the largest British car manufacturer. China is an important sales market for JLR. However, sales have fallen significantly: Within ten years, Jaguar Land Rover sales in China have more than halved to a good 60,000 cars last year.

Some car manufacturers with large factories in the Kingdom are urging London to rethink their approach - especially in view of the threat of exclusion from the “Made in Europe” plan. Massimiliano Messina, Nissan's European boss, recently said that Great Britain was threatening to become a "corridor" for China's electric cars, which then ended up in the EU market. “The UK needs to adapt its tariff policy,” Messina said.

The automotive industry association, the Society of Motor Manufacturers and Traders (SMMT), also warns of the consequences if British cars are excluded from the EU market. Around 58 percent of all cars from the island are sold in the EU. The automotive industries of Great Britain and the EU are closely linked, emphasized SMMT managing director Mike Hawes. If vehicles or vehicle parts produced in Britain were excluded from the EU market, it would harm both sides.