Workers assemble new energy vehicles at electric vehicle company Leap Motor’s intelligent factory in Jinhua, Zhejiang Province, China, January 13, 2026.
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Britain has broken with the US by opening up to China’s electric car giant.
Without China-specific additional tariffs, Chinese EVs would only be subject to a standard import duty of 10% in the UK, one of its largest overseas markets. This is also lacking in Japan and Norway.
This is in contrast to the US, which effectively shut out Chinese EVs with 100% tariffs. The European Union, Britain’s largest trading partner, imposes a standard import duty of 10% on all foreign cars, plus manufacturer-specific duties of up to 35.3% on Chinese-made EVs.
The UK now faces difficult choices as the EU’s proposals could force it to impose regionally tailored tariffs.
Over the weekend, the Sunday Times reported that British Business Secretary Jonathan Reynolds is considering matching EU taxes on Chinese EVs to avoid pain from so-called “Made in Europe” proposals that could hurt domestic companies selling to the EU.
A UK government spokesperson reiterated to CNBC that the UK is not imposing tariffs on Chinese EVs, adding: “We continue to work closely with industry to ensure our approach reflects industry and the UK’s national interests.”
The Made in Europe law, which is part of the EU’s industrial promotion law, aims to protect EU industry from unfair international competition by giving priority to products made in Europe.
EU officials told the Financial Times in September that London needed to raise tariffs on Chinese-made EVs and align more closely with EU trade policy to avoid “made in Europe” barriers.
The decision is a delicate balance, given Prime Minister Andy Burnham’s desire to reset relations with the EU, which the UK formally left in 2020, and the possibility that China may respond with retaliatory measures.
A spokesperson for the Chinese embassy in London said it had expressed “serious concerns” to the UK about reports of possible tariffs.
“China firmly opposes any discriminatory actions, including increased tariffs and restrictive measures, against Chinese products,” the spokesperson said on Tuesday. “We will continue to monitor developments and respond accordingly,” they said.
Chinese car manufacturers rapidly expand into the UK
Chinese car brands rapidly gain market share in the UK
According to an analysis by JATO Dynamics, the number of registrations by Chinese automakers, or original equipment manufacturers (OEMs), including both battery electric powertrains and hybrid powertrains, increased to 519,424 units from the beginning of January to the end of August, raising the total market share to 28.1%. This is a significant increase from 12.9% in the same period in 2025.
Hybrid vehicle registrations increased by 62,655 units, while battery electric vehicle registrations accounted for a larger increase at 32,565 units.
British Prime Minister Andy Burnham speaks with French President Emmanuel Macron inside 10 Downing Street on Thursday, September 3, 2026 in London, England.
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“It’s important for policy,” Paul Hilton, head of retail at JATO Dynamics, told CNBC in an email.
“Tariffs targeting only Chinese-made battery EVs may slow some of the expansion, but they do not address the growth of hybrids, vehicles made outside China, or their fundamental advantages in cost, product pace, or supply chain,” Hilton said.
“A sustained UK response needs to combine evidence-based trade remedies with incentives for local production, competitive energy and battery costs, charging infrastructure, skills and alignment with European market access rules.”
Takeover of “Tem Range Rover”
Last month’s best-selling car in the UK wasn’t a Tesla or a Ford, but China’s Jaecoo 7.
Known as the Range Rover, the mid-size SUV starts at around £29,000 (about $38,350) in the UK, compared to around £45,500 for the Land Rover Discovery Sport.
According to the Automobile Manufacturers and Trade Association, Jaecoo 7 sold 10,814 units in the United States in September, surpassing the Tesla Model 3, Ford Puma and Kia Sportage.
A Jaecoo 7 (J7) SUV at the Omoda and Jaecoo showroom, a brand of Chinese car manufacturer Chery Automobile, in Gokebela, South Africa, Saturday, March 7, 2026.
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Rico Luman, senior sector economist for transport and logistics at ING, said the widening policy gap between the UK and the EU meant that Britain had limited options other than tariffs if it wanted to maintain a level playing field with the EU.
Luhmann told CNBC in an email that exclusion from the Made in Europe initiative could have a “significant impact” on existing companies, making it increasingly difficult to avoid close alignment with EU trade policy.
“It is very noteworthy that Chinese-made batteries are generally exempted from EU tariffs,” Luhmann said.
“At the same time, this makes sense because European production has not kept up and Europe lacks rare earth minerals and the refining capacity behind them,” he added.
