27th September 2026
Britain is facing an awkward choice over Chinese cars.
The European Union is pressing the UK to raise tariffs on Chinese-made vehicles and bring its trade policy closer to the EU's approach.
The reason is not simply concern about competition from China. Brussels is developing a new "Made in Europe" industrial policy designed to favour European manufacturers and reduce dependence on Chinese supply chains.
Britain wants its car industry to benefit from that policy. But the EU is increasingly concerned that the UK could have different trade rules from the EU and become a route into the European market for Chinese-made goods.
This leaves Britain with a difficult balancing act.
Britain chose a different route
When the EU introduced additional tariffs on Chinese electric vehicles in 2024, Britain did not follow.
Chinese cars entering Britain generally face the UK's standard 10% import tariff, whereas the EU applies additional anti-subsidy duties to Chinese battery-electric vehicles, depending on the manufacturer. Some of the EU duties can take the total tariff to around 45%.
The difference has helped make Britain an increasingly important market for Chinese manufacturers.
Chinese brands now account for more than 15% of British new-car registrations in the first eight months of 2026, according to figures reported by Auto Express.
For motorists, there is an obvious attraction.
More manufacturers competing for customers can mean more choice and potentially lower prices, particularly at a time when the cost of buying a new car has become a significant household expense.
But there is another side to the argument.
What happens to British manufacturing?
Britain still has a substantial automotive industry, with thousands of jobs and a large network of component suppliers.
Nissan's Sunderland plant is a particularly important example.
Nissan has recently announced a £170 million investment to build a new hybrid SUV at Sunderland, while it is also discussing a possible manufacturing arrangement with Chinese manufacturer Chery. Nissan has separately been calling for the UK to introduce tariffs on Chinese vehicles.
That illustrates the complexity of the situation.
China is simultaneously seen as a competitor to British car manufacturers and a potential source of investment and manufacturing activity in Britain.
Putting tariffs on Chinese cars might protect some British manufacturers from competition.
But it could also make Chinese companies less interested in investing in Britain.
And if Chinese companies manufacture vehicles in Britain, those cars could potentially become part of Britain's future export relationship with Europe.
The EU problem
This is where Brexit enters the story.
The EU's proposed "Made in Europe" approach could give European-made vehicles advantages in areas such as public procurement and incentives for greener fleets.
The British motor industry is concerned that UK-built vehicles could be disadvantaged even though British and European automotive supply chains remain closely connected.
The Society of Motor Manufacturers and Traders says annual UK-EU automotive trade is worth around €80 billion.
The EU's argument is that it cannot easily give Britain the same treatment as EU members if Britain maintains significantly different trade rules.
There is also a practical concern.
If a Chinese car can enter Britain under a lower tariff and then potentially move into the European market, the EU has an obvious reason to want Britain to have similar trade protections.
Brussels has therefore been telling Britain that closer alignment on tariffs would make it easier to avoid barriers under the "Made in Europe" policy.
But tariffs have a cost
The problem is that tariffs are not free.
Ultimately, somebody pays them.
They can protect domestic manufacturers from overseas competition, but they can also increase the price of imported vehicles.
That matters to consumers who are already facing high motoring costs.
There is also a wider question about electric vehicles.
Britain wants motorists to move towards lower-emission vehicles. If Chinese manufacturers can produce electric cars relatively cheaply, restricting them could make that transition more expensive.
On the other hand, allowing heavily subsidised overseas competition to take a large share of the market could make it harder for British and European manufacturers to invest and survive.
This is why the argument is not as simple as free trade versus protectionism.
Britain has to choose its priorities
There is a further complication.
Britain wants to maintain a close trading relationship with Europe, attract investment from China, support British manufacturing and keep prices competitive for consumers.
Those objectives can sometimes point in different directions.
The EU is effectively saying that if Britain wants to be treated as part of Europe's industrial economy, it cannot completely separate its trade policy from Europe's approach to China.
The British Government, meanwhile, has said that trade measures will be decided independently according to Britain's economic interests, while also recognising the importance of protecting trade flows with Europe.
There may therefore be no perfect answer.
Higher tariffs could help protect parts of the British car industry but risk higher prices and less competition.
Lower tariffs give consumers more choice and may encourage Chinese investment, but could increase the competitive pressure on British manufacturers and create difficulties with the EU.
For Britain, the Chinese car issue is therefore becoming another example of the difficult economic choices that come with being outside the EU.
Having the freedom to set your own trade policy also means having to decide what you are prepared to give up in return.
And in this case, the choices are not simply between Britain and China.
They involve British motorists, British factories, Chinese investors and Britain's biggest trading partner, the European Union.