Britain opened its market to China’s electric vehicle juggernaut while the United States effectively shut the door. That divergence has given Chinese manufacturers room to expand rapidly in one of the largest major overseas markets without additional tariffs targeting China.
Chinese EVs entering Britain face only the standard 10% import duty. By comparison, the United States imposed a 100% tariff, while the European Union applies manufacturer specific duties of up to 35.3% in addition to its standard 10% levy on foreign cars.
Britain now faces a difficult decision as European Union proposals threaten consequences for countries that remain outside the bloc’s trade approach. Matching European tariffs could provoke China, while refusing could expose British companies to new barriers.
The Sunday Times reported that U.K. Business Minister Jonathan Reynolds is considering matching the European Union’s levy on Chinese EVs. The move would seek to avoid damage from proposed “Made in Europe” rules that could hurt domestic companies selling into the bloc.
A U.K. government spokesperson reiterated that Britain had not imposed tariffs on Chinese EVs. The spokesperson added: “We continue to engage closely with industry so that our approach reflects the sector’s and UK’s national interests.”
The Made in Europe legislation forms part of the European Union’s Industrial Accelerator Act. It is intended to protect the bloc’s industries from unfair international competition by giving priority to goods made in Europe.
An European Union official told the Financial Times in September that London would need to increase tariffs on Chinese EVs and move closer to the bloc’s trade policy. Otherwise, Britain could face barriers under the Made in Europe initiative.
The decision is finely balanced because Prime Minister Andy Burnham wants to reset relations with the European Union, which Britain formally left in 2020. At the same time, new tariffs could bring retaliatory measures from China.
A spokesperson for the Chinese Embassy in London said China had expressed “serious concern” to Britain about reports of possible tariffs. “China is firmly opposed to any discriminatory practice involving tariff hikes or restrictive measures on Chinese products,” the spokesperson said Tuesday.
The spokesperson also warned that Beijing was watching the matter, saying: “We will continue to follow developments and respond accordingly,” Chinese manufacturers, meanwhile, have already secured a substantial presence in the British vehicle market.
JATO Dynamics found registrations of Chinese automakers across battery electric and hybrid powertrains reached 519,424 between the beginning of January and the end of August. Their total market share climbed to 28.1%, up sharply from 12.9% during the same period in 2025.
Hybrids delivered the larger increase, adding 62,655 registrations compared with 32,565 for battery electric vehicles. Paul Hilton, head of retail at JATO Dynamics, said by email that this distinction matters for policymakers considering tariffs.
“Tariffs aimed only at Chinese-built battery EVs could slow one part of the expansion, but would not address hybrid growth, vehicles made outside China or the underlying advantages in cost, product cadence and supply chains,” Hilton told CNBC.
Hilton said a durable British response should combine any justified trade remedy with incentives supporting local production. He also cited competitive energy and battery costs, charging infrastructure, skills and alignment with European rules governing market access.
The strength of Chinese brands was visible in Britain’s bestselling car last month. The Jaecoo 7, a Chinese midsize SUV nicknamed the “Temu Range Rover,” finished ahead of vehicles from Tesla, Ford and Kia.
The Jaecoo 7 starts at about £29,000 ($38,350) in Britain, compared with roughly £45,500 for a Land Rover Discovery Sport. Nationwide sales reached 10,814 in September, according to the Society of Motor Manufacturers and Traders.
Rico Luman, senior sector economist for transport and logistics at ING, said the widening policy gap between Britain and the European Union leaves London with limited options beyond tariffs if it wants to preserve a level playing field.
Luman said exclusion from the Made in Europe initiative could have “significant consequences” for existing businesses. That possibility is making closer alignment with European Union trade policy increasingly difficult for Britain to avoid.
“It’s generally quite remarkable that batteries from China are exempted from EU tariffs,” Luman said. He added: “At the same time this is logical as production in Europe isn’t up to speed and Europe lacks the rare earth minerals and refinery capacity behind it.”