UK car industry faces ‘difficult trade-off’ between Chinese and EU markets
Summary
The UK car industry is facing a tough choice between growing trade with China or maintaining access to the European Union market. The UK currently allows low-cost Chinese cars to enter without import taxes, unlike the EU and US, but Brussels has warned this may lead to restrictions on UK car exports to Europe, the UK’s largest market.Key Facts
- The UK does not tax imported Chinese cars, while the EU charges up to 45% duties and the US restricts Chinese vehicles almost completely.
- EU officials warned the UK to impose tariffs on Chinese cars or face trade barriers that could hurt UK car exports to Europe.
- UK ministers worry tariffs on Chinese cars would lead to China imposing similar taxes on UK exports.
- Chinese car brands have increased their UK market share from 4% to 12% in early 2026, helping boost British new car sales by 12% year-on-year.
- Chinese investments, such as Chery’s talks to build cars at Nissan’s Sunderland plant, are seen as important for the UK car industry.
- The EU is considering new trade rules restricting subsidies and contracts to cars made within the EU, threatening UK car production.
- The EU accounted for 58% of UK car exports in the first half of the year, compared to just 4% for China.
- Industry leaders say excluding UK cars from the EU market would harm both sides, while some warn about Chinese car imports flooding Europe through the UK.
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