Tuesday 20 October 2026Economy Climate

Reynolds will not copy EU tariffs on Chinese cars just because Brussels asks

In 30 seconds

The story

Jonathan Reynolds says he will not tariff Chinese cars because Brussels asks. No 10 left the option open on 16 October. Nothing has been imposed.

The numbers

Chinese-owned brands took 27.5% of September's 350,536 registrations. Battery-electric cars are 26.2% of sales this year against a 33% target.

My verdictPartly right

Do not copy the EU's rates on request. If a duty comes, it should rest on a UK investigation.

Why

What happened

On 14 October Jonathan Reynolds, the business secretary, said he would not change Britain's trade rules because Brussels asked. Any tariff decision is "based on the UK interest – it's not based on any other country asking for that." He said the government looked at Chinese electric cars in 2024 and keeps the question under review, and that the sector is export-led. A government spokesperson had already told the Guardian, on 5 October, that no tariffs have been put on Chinese electric cars.

Two days later No 10 left the door open. France had dropped its opposition to Britain joining the EU's Made in Europe scheme if the UK accepted "dynamic alignment" with EU trade-defence measures, including the electric-car tariffs. A No 10 spokesperson said it was "premature to speculate" and that Britain "keeps all tariffs under review." The Chinese embassy in London called tariff hikes on Chinese products "discriminatory". The trade minister, Anas Sarwar, told Politico that Britain and the EU should "act in lockstep".

The row started earlier in the month. The Times reported on 4 October that Reynolds was drawing up a package of potential tariffs, citing dumping of subsidised cars. Reuters, carried by AsiaOne, could not verify that report. The EU has charged extra duties of 7.8% to 35.3% since 29 October 2024, up to about 45% once its ordinary import duty is included. Britain did not adopt them.

What's really going on

Brussels has tied the question to the Industrial Accelerator Act, the Made in Europe plan. The Guardian reported on 5 October that the EU has raised tariffs with London as the price of inclusion, and that Mike Hawes of the SMMT wants Britain treated as a trusted partner. FleetPoint, citing SMMT analysis, says UK car production supports €24bn of activity and 250,000 jobs inside the EU. From 1 January 2027, stricter rules of origin could put a 10% tariff on electric cars traded between Britain and the EU that miss the local-content test.

The sales figures are not in dispute. Chinese-owned brands took 27.5% of September registrations, in a market of 350,536 new cars, up 12.0% on a year earlier. BYD registered 20,140. Battery-electric cars are 26.2% of sales this year, against the 33% required in 2026. The SMMT says that share needs 265,000 more battery-electric registrations in the final quarter, against September's record of 99,201.

There is still no UK rate. FleetPoint says none has been confirmed, and that the government confirmed in July the Trade Remedies Authority had not opened an electric-vehicle case. Its public case list on 20 October still has none. EU rates differ by company: 17% for BYD and 35.3% for SAIC. China has taken the EU's duties to the WTO.

The strongest case on each side

The case for drawing up tariffs

Brussels has made China-tariff alignment a condition of Made in Europe access, which UK carmakers need.
Chinese-owned brands took 27.5% of September's market, and the EU found Chinese battery-car production is subsidised.
The EU charges up to about 45%. Britain has not added an anti-subsidy duty, so Brussels fears a back door.

The case against

Battery-electric sales are 26.2% this year against a 33% mandate. Cheaper Chinese models are closing that gap, and a tariff would widen it.
Reynolds says the sector is export-led, and that a tariff is a UK decision, not a favour to Brussels.
No UK body has found dumping or injury. The TRA has not opened an investigation, and high sales are not themselves unlawful pricing.

My verdict: partly right

Refusing to copy the EU's rates because Brussels asked is the right call. The industry is export-led, as Reynolds said on 14 October, and a duty with no UK finding is legally exposed. Britain looked at this in 2024, and the Trade Remedies Authority has still not opened a case.

Leaving the option open, as No 10 did on 16 October, does not fix that. Any duty should follow a UK investigation or a published price floor, not a Franco-German term sheet. A tariff would also raise the price of the cars that are pulling battery-electric sales towards a 33% target the market is missing.

What I'd do instead

I would not match the EU's rate card. I would open a UK investigation and, if the evidence supports it, bargain for a price floor with investment attached.

Refer Chinese electric cars to the Trade Remedies Authority now

Ask the TRA to open an anti-subsidy investigation, so any duty rests on a UK finding rather than an EU one.

How it would work: The business secretary or a UK producer files a complaint. The Trade Remedies Authority investigates subsidy and injury and recommends a rate.
What it costs: The TRA is already funded, and no cost for a single case is published. The real cost is time, while imports continue and no UK rate exists.
Who it affects: Importers of BYD, Chery and Geely models, their dealers and buyers of cheaper cars. UK producers get a formal route to argue injury.
Tried before?: The machinery is in use. The TRA's public list includes a dumping case on boom lifts from China, opened in December 2025. It has no electric-vehicle case.
The risk: The TRA may find subsidy but little UK injury, since no British plant makes a cheap mass-market electric car. A low rate would weaken Britain's hand in Brussels.

Negotiate a minimum import price rather than a flat duty

Use the EU's January 2026 price-undertaking template to set a floor price per vehicle, with conditions on UK investment, as Britain's offer in any alignment talks.

How it would work: The business department agrees a minimum import price with Chinese exporters, with commitments on UK investment and sales channels. The Commission's January 2026 guidance is the template.
What it costs: No duty revenue for the Treasury, and no UK yield estimate exists. Buyers of the cheapest models pay more, depending on where the floor sits.
Who it affects: Chinese exporters keep access but lose their edge at the bottom of the market. The Guardian reports Nissan has agreed to look at building Chery cars in northern England.
Tried before?: Only in Brussels. The Commission published guidance on 12 January 2026 covering minimum price, sales channels, cross-compensation and future EU investment. Nothing similar was found in the UK.
The risk: A floor price is easier to game than a duty, through specification changes or bundled finance. Brussels may refuse to count a British variant as alignment.

Publish the price and target arithmetic before any decision

Before any tariff is announced, the department should publish what each rate band would do to car prices, the 33% electric target and EU market access.

The problem: No UK tariff rate, revenue estimate, price impact or injury finding has been published. The only numbers in circulation are the EU's, built for a different market.
How it would work: The Department for Business and Trade publishes a short assessment with each option, showing the cost on a typical Chinese electric car and the export gain from alignment.
What it costs: Officials' time within existing budgets. The price is lost negotiating secrecy, since Brussels and Beijing would read the same document.
Who it affects: Buyers and dealers, who would see the likely price effect before ordering. Ministers, who would defend a number rather than a leak.
Tried before?: No. FleetPoint and the Guardian report no UK rate, revenue estimate or price-impact assessment. The EU has published its rates. Britain has not published its own.
The risk: Publishing options hardens them into expectations. An assessment showing tariffs widen the gap to 33% would hand opponents a figure.

The trade-off

Buyers of the cheapest electric cars pay more under any version of this, and a TRA case leaves the current tariff in place for months. The government swaps a quick announcement for a defensible one.

How we'd know it worked

If this works, any UK duty announced by mid-2027 will cite a TRA finding or a published price undertaking. Battery-electric share will still be rising.

What to watch

SMMT full-year 2026 registration data, published in early January
Stricter UK-EU rules of origin for electric vehicles, due 1 January 2027
Any UK tariff decision on Chinese electric vehicles

Each of these is logged as an open call on my track record.