Dealerships representing fast-growing Chinese brands are facing fresh uncertainty after Beijing warned it could respond to any UK tariffs on Chinese-built electric vehicles.
The Telegraph reports that the Chinese embassy in London has expressed “serious concern” to the Government following reports that the UK’s business secretary Jonathan Reynolds had authorised officials to examine potential tariffs.
No decision has been announced, but the options are reported to include aligning the UK more closely with European Union duties that could take the total tariff on some Chinese-built EVs to more than 45%.
The UK currently applies its standard 10% car import duty without the additional countervailing charges introduced by the EU.
A Chinese embassy spokesperson told the newspaper: “China is firmly opposed to any discriminatory practice involving tariff hikes or restrictive measures on Chinese products. We have expressed serious concern to the UK side regarding the reports in question.
“Trade protectionism runs counter to WTO rules and market principles. It will only disrupt the normal order of trade and harm the interests of consumers. We will continue to follow developments and respond accordingly.”
The EU applies additional duties ranging from 7.8% to 35.3%, depending on the manufacturer and its cooperation with the European Commission’s anti-subsidy investigation.
It is not clear whether Britain would adopt those manufacturer-specific rates, introduce a single tariff or pursue a different approach.
Robert Forrester, chief executive of Vertu Motors, said tariffs might curb the rate of expansion without removing the underlying cost advantage held by Chinese manufacturers.
“And you don’t know if the costs would be absorbed,” he added. “They might well choose to do so because the Chinese domestic market absorbs only about half the cars they make, which leaves 20 million cars to send somewhere else.”
The scope of any measure will also matter. Existing EU countervailing duties only apply to battery electric cars built in China rather than every vehicle sold by a Chinese-owned brand.
If the UK follows that model, plug-in hybrids, conventional hybrids and petrol models could remain outside the additional duty although the European Union is understood to be considering including hybrid powertrains.
Sales momentum raises the stakes
The debate comes as Chinese manufacturers rapidly increase their presence through UK dealerships.
SMMT figures show BYD registered 20,140 cars in September, giving it a 5.75% share of the market. Jaecoo recorded 15,057 registrations, Chery 9,793, Omoda 7,241 and Leapmotor 3,943.
The Government also has to balance the potential impact of the EU’s proposed Industrial Accelerator Act which would introduce “Made in EU” conditions for vehicles benefiting from public support and procurement schemes.
Britain is seeking recognition as a trusted partner as the EU remains the largest destination for UK-built cars.
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