UK’s Decision to Waive Tariffs on Chinese Electric Cars: Economic and Political Implications

UK Won’t Impose Severe Tariffs on Chinese Electric Vehicle Imports

The UK Secretary of State for Trade, Jonathan Reynolds, stated that the UK does not intend to follow the EU’s example in imposing severe tariffs on imports of Chinese electric vehicles.

Speaking at a G7 trade ministers’ meeting in Italy, Reynolds mentioned discussing with his European counterparts the EU’s decision to impose duties on Chinese electric vehicles as a measure to counter what the block deems as unfair state subsidies.

However, the new Labour minister indicated that, although concerned, he does not plan to initiate a formal investigation into Chinese electric vehicle imports.

“I’m not ruling anything out, but if you’re a very export-oriented industry, the decision you make [has to be] right for that sector,” stated Reynolds.

Internal sources within the British government note that the UK automotive sector has not formally requested the Trade Remedies Authority to launch an investigation into Chinese electric vehicle imports, a necessary step for the UK to start an inquiry.

In 2023, the UK exported approximately 700,000 cars in total, including models from Nissan, Jaguar Land Rover, and Mini.
Only 7% of these were exported to China, while 60% were destined for EU27 countries, indicating that the UK would be less exposed than other countries, such as Germany, to retaliatory actions from Beijing.

However, the UK’s domestic market for electric vehicles is dominated by brands that produce cars in China, including Tesla, BMW, and MG, owned by the Chinese SAIC Motors.

In June, Brussels announced an increase in tariffs on electric vehicles manufactured in China by up to 38% following an anti-subsidy investigation.
These tariffs will affect both Chinese brands exporting to Europe and Western brands producing electric vehicles in China.

“What I’ve heard is that the UK will not follow the European Union,” stated Victor Zhang, CEO of Chery in the UK, at the Goodwood Festival of Speed last weekend.
“I think that would be a wise decision.”

Chery has partnered with JLR in China and has opened 60 dealerships in the UK ahead of selling two brands starting later this year.

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