Britain is wary of a trade fight with Beijing, while the EU is seeking voluntary curbs on Chinese hybrid car exports to protect its auto industry and contain a widening trade deficit
Britain cannot afford to impose tariffs on Chinese electric vehicles because Beijing could retaliate against British exports, UK Business Secretary Jonathan Reynolds has warned, as the European Union separately seeks voluntary curbs on Chinese hybrid car exports.
Reynolds said on Wednesday that protecting British carmakers from cheaper Chinese vehicles could trigger a wider trade dispute that would hurt UK businesses exporting to China.
“The fundamental thing is, where are our interests in the UK?” Reynolds said, according to a report by The Telegraph. He was speaking at the McLaren factory in Woking, Surrey.
Reynolds argued that any attempt to introduce tariffs on Chinese vehicles could lead to retaliatory measures from Beijing. That could affect British carmakers with significant exposure to the Chinese market, including Jaguar Land Rover, Bentley, Rolls-Royce, Aston Martin and McLaren.
The comments come as the UK faces growing pressure from its own car industry to take action against Chinese vehicle imports.
Nissan has called on Britain to introduce tariffs on Chinese cars, arguing that the move could help protect UK manufacturing. The company has also raised concerns about the impact of proposed EU “Made in Europe” rules on British-made vehicles.
The debate has become more complicated as Chinese automakers expand their presence in European markets.
More from BusinessEU seeks 15% cap on Chinese hybrids
The European Union has asked China to voluntarily restrict its exports of hybrid vehicles to the bloc, the Financial Times reported on Thursday.
Brussels wants Chinese hybrid vehicles to account for about 15 per cent of the EU market, compared with more than one-third currently, according to the report.
The proposal is aimed at preventing a wider trade dispute and reducing pressure on European carmakers.
An EU official told the FT that if China did not limit exports voluntarily, the bloc could impose its own restrictions. The EU is also seeking limits on some other Chinese exports, including chemicals, while encouraging Beijing to buy more goods from Europe.
The EU already imposes additional tariffs on Chinese electric vehicles. Chinese hybrid cars have faced lower trade barriers, and their sales in Europe have increased sharply.
The European Commission has argued that a rise in Chinese exports of vehicles, batteries and chemicals is partly linked to excess industrial capacity in China. Beijing rejects the criticism and has described concerns over overcapacity as protectionist.
China trade deficit adds pressure
European Commission President Ursula von der Leyen said on Wednesday that the EU would use all available tools to reduce its trade deficit with China.
The bloc’s goods trade deficit with China reached €360.6 billion ($413.4 billion) in 2025. Reuters reported that the deficit widened by 9 per cent in the first six months of 2026. Von der Leyen said Europe was experiencing a second “China shock” through deindustrialisation.
European Trade Commissioner Maros Sefcovic is leading talks with Beijing and wants tangible progress on the trade imbalance by October. He is expected to travel to China early next month.
For Britain, the dilemma is different. China is an important export market for UK companies, particularly luxury carmakers. UK government data shows that Britain exported £31.4 billion of goods and services to China in the four quarters to the end of 2025. Cars were the largest UK goods export to China, worth £3.5 billion in the four quarters to the end of the first quarter of 2026.
