Tariffs on Chinese cars could hurt consumers rather than help

Fraser Brown, the managing director of MotorVise, cautions that applying duties to Chinese-made cars could address the wrong issue. While the lure of tariffs is strong amid swift competition from China, Brown contends that such steps are likely to burden shoppers rather than shield the home market.

Rising market share

Chinese auto makers have achieved notable inroads in the United Kingdom’s vehicle sector. Names that were virtually unknown a few years ago now enjoy widespread recognition, and the Jaecoo 7 topped September’s sales chart, ranking as the country’s best-selling model for the month and the second-best overall for the year, with 39,474 units recorded.

This brisk expansion inevitably sparks debate over whether Chinese firms benefit from an inequitable edge and whether the UK should emulate the European Union by levying extra duties on electric cars built in China. Brown, however, warns that any such tariffs could effectively become a levy on competition and, ultimately, on consumers.

Market forces and affordability

The government’s objective is to persuade drivers to adopt electric vehicles, and its Zero Emission Vehicle (ZEV) mandate stipulates that a rising share of new registrations must be zero-emission, aiming for a 33% share this year. Yet the cost of EVs remains a principal barrier to mass uptake.

Chinese producers are mitigating this problem by offering low-priced models that often feature technology and equipment typical of higher-priced rivals. The Society of Motor Manufacturers and Traders (SMMT) credited September’s broader market expansion largely to “intense competition – significantly from new entrants – increased choice and attractive deals”. It also highlighted expanded model ranges and compelling discounts as drivers of the record-high electric-car registrations.

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While manufacturers might absorb a portion of a hefty duty, a segment would inevitably be reflected in higher showroom prices, less favourable financing terms, or slimmer incentive schemes. Such outcomes would run counter to the need for more affordable EVs. SMMT data for September show this point: nearly 100,000 battery-electric cars were registered, marking a year-on-year rise of over 33%. Although encouraging, battery-electric vehicles represented 28.3% of September’s registrations and 26.2% of the year to date—still below the 33% ZEV target set for 2026. Raising the price of the most competitively priced EVs does not appear to be a clear path toward closing that gap.

Investment and retaliation

Heightened rivalry benefits the car industry. Chinese marques have entered the market with well-equipped, technologically advanced, and aggressively priced models, prompting all manufacturers to reassess the value they deliver. A similar trajectory was observed with Japanese entrants, later followed by Korean brands, both of which eventually lifted industry standards and became fixtures of the UK automotive environment.

Responding to intensified competition should not automatically mean making rivals’ offerings costlier. The United Kingdom requires a robust domestic automotive sector that sustains hundreds of thousands of jobs, and policy should support an environment where local producers can invest and compete. Rather than imposing duties, attention ought to be directed toward attracting automotive capital, supporting battery-cell production, lowering energy expenses, expanding charging networks, and enticing foreign manufacturers to set up production locally. Several Chinese automotive groups are already scouting global sites for new plants; the UK should present the most compelling case for such investment instead of signaling that their products are unwelcome.

There is also a danger of retaliatory measures. The automotive field is among the world’s most globally integrated industries, with supply chains crossing multiple borders and British firms exporting vehicles worldwide. Once protectionist barriers are erected, there is no assurance that the repercussions will be confined to the initially targeted goods. Brown recognises the tough position ministers face, especially given the UK’s ties to the European automotive market. Britain cannot disregard policies adopted in Brussels or the potential fallout for UK exporters to Europe. Nonetheless, trade strategy ought to be shaped by what best serves the British car sector and its buyers, rather than simply mirroring actions taken elsewhere.

Attracting Capital and Avoiding Retaliation

Officials should instead focus on attracting investment, supporting battery production, and lowering energy costs. The United Kingdom should make a strong case for international manufacturers to build vehicles locally rather than signaling that their products are unwelcome.