Brussels has told London to raise tariffs on Chinese EV imports and align its trade policy with the bloc — or risk watching key British exports shut out of the EU's "made in Europe" subsidy and procurement framework.

The demand, reported by the Financial Times on September 25 citing people familiar with the matter, comes with a condition attached to Britain's automotive, chemical and energy supply chains. An EU official told the FT that joining the EU customs union would resolve most of the outstanding issues, including Brussels' concern that Chinese goods could bypass EU tariffs by entering through Britain. The British government continues to rule out that option.

The pressure lands on a UK market where Chinese manufacturers have already captured a combined 16% share of new car sales this year, according to the report. Britain declined to follow the EU's lead in 2024, when Brussels imposed definitive countervailing duties on battery electric vehicles imported from China for five years, starting in October 2024.

Those duties run between 7.8% and 35.3%, on top of the existing 10% standard import duty — a maximum total tariff of 45.3%.

Sunderland and the investment problem

For UK plant planners, the trade-off is sharpened by investment strategy. London is actively courting Chinese automotive capital, including efforts to bring Chery production to Nissan's Sunderland plant. Higher tariffs on Chinese EVs could complicate that pitch.

Nissan's European boss Massimiliano Messina warned this month that Britain risked becoming a "corridor" into the EU for Chinese EVs, and called for adjustments to some tariff policies, the report noted. His warning carries weight in the North East, where Sunderland's output depends on frictionless access to European buyers.

The British government has drawn its own red lines. It will not join the EU customs union or single market, which limits how far trade policy can converge with Brussels even as it seeks to keep British firms inside European supply chains.

The UK department responsible for trade told the FT that trade measures would be determined independently, based on the country's economic and industrial interests. The department stressed the need to protect trade flows between Britain and the EU and said Britain wanted to deepen cooperation with the bloc while avoiding "collateral damage" from their shared ambition to tackle unfair trading practices.

What Brussels wants

The EU's "made in Europe" policy favors manufacturers inside the bloc through subsidies and public procurement, framed as a counter to Chinese competition. Britain wants its automotive, chemical and energy supply chains written into that framework. The concern in London is concrete: domestic companies could be excluded from major EU subsidy programs if they sit outside the fence.

For UK-based suppliers and OEMs, the stakes run in both directions. Tariff alignment with the EU would help preserve their position in European supply chains. It would also raise car prices for British consumers, who currently buy Chinese-brand vehicles at a faster clip than any EU market of comparable size.

Refusal carries its own cost. If "made in Europe" rules exclude UK content, British parts makers and vehicle producers could lose access to EU subsidy programs and face procurement barriers — a structural disadvantage for an industry that exports the bulk of its output to the continent.

What to watch

Three decisions will shape the outcome. First, whether London adjusts its Chinese EV tariff stance as the EU's five-year duty regime matures — and whether Brussels escalates rules-of-origin or safeguard checks on UK-bound Chinese vehicles re-exported to the continent. Second, the fate of the Chery-to-Sunderland talks, which will test whether Chinese investment can be squared with European market access. Third, the scope of the EU's "made in Europe" subsidy framework and whether British supply chains win inclusion — the question Brussels has now explicitly linked to customs union membership that London says it will never accept.