The EU recently demanded that the UK adjust its trade policy towards China to be closer to EU standards. Specifically, London would have to increase tariffs on Chinese cars if it wanted to avoid discriminatory treatment for cars from British manufacturers under the EU's "Made in Europe" initiative.
The timing of the EU's request is no coincidence. China's car exports are accelerating sharply. In August, its electric vehicle (EV) exports increased 33% year-on-year to over 284,000 vehicles. From the beginning of the year to the end of August, China exported more than 2.1 million EVs, a 53% increase year-on-year. Many of these were exported to the European market.
To protect its domestic automotive industry, following an anti-subsidy investigation conducted in 2024, the EU imposed retaliatory tariffs ranging from 7.8% to 35.3% on Chinese battery-electric vehicles.
Meanwhile, the UK maintains a standard, less punitive tariff regime on Chinese cars. This policy suggests that the UK is an attractive and important market for Chinese car manufacturers. According to the European Automobile Manufacturers Association, cars manufactured in China will account for 14% of total new car sales in the UK by 2025.
This reality also means that Europe's proposal creates a rather awkward situation for the British automotive industry, which is heavily dependent on exports. In 2025, the UK will export approximately 555,826 cars, equivalent to 77.5% of total production. The fact that the EU accounts for 56.7% of UK car exports shows that even after leaving the EU, British car factories remain closely tied to the market and supply chain of the European continent.
This is a readily apparent weakness when it comes to tax policies for Chinese cars. If the UK maintains a significantly different trade policy from the EU, it could attract more Chinese car manufacturers due to a more open market. However, that advantage must be weighed against the risk of British manufacturers being at a disadvantage in accessing the European market or EU production support programs.
However, the picture isn't entirely negative. One of the most viable ways out for the UK automotive industry is to leverage the growth of electric vehicles to reach new markets. By 2025, pure electric vehicles (BEVs), plug-in hybrid vehicles (PHEVs), and self-charging hybrid vehicles (HEVs) are projected to account for a record high of 41.7% of total UK car production. In Sunderland, Nissan is expanding production of its next-generation electric vehicles, while projects related to batteries and electric powertrains are forming a new industrial cluster in northern England.
Nissan is also a prime example of how international corporations are contributing to maintaining the UK's role in the global manufacturing network. The company has committed £450 million to produce the next generation of Leaf electric vehicles in Sunderland, while a £50 million JATCO project is underway to manufacture electric powertrains in the area. The UK government says the JATCO plant is expected to reach a capacity of 340,000 electric powertrains per year from 2026.
On the other hand, the British automotive industry still holds a distinct advantage in the ultra-luxury segment with brands like Jaguar Land Rover, Bentley, Rolls-Royce, Aston Martin, McLaren, and Lotus. These brands help the British automotive industry maintain added value and technical expertise, even without exceptionally high sales figures.
Thus, the challenge for the British automotive industry now is to balance the benefits of a more open market with the need to maintain access to the EU – the industry's largest export market. Without transforming independent trade policies into a real advantage for domestic production, London may find it difficult to both prevent competition from Chinese cars and weaken the position of British car manufacturers within the European industrial chain.
Source: https://hanoimoi.vn/nganh-o-to-anh-tien-thoai-luong-nan-giua-trung-quoc-va-chau-au-1759411.html
