Chinese cars are starting to cause concern in the United Kingdom as well. While the European Union seeks to limit dependence on Chinese manufacturers, Brussels has reportedly asked London to raise tariffs on cars manufactured in China. The goal is to prevent Chinese models from passing through the United Kingdom to dodge European taxes.
This request comes as the United Kingdom is precisely trying to maintain good trade relations with the European Union. A crucial challenge for its auto industry, which remains deeply intertwined with the European market.
Brussels seeks to prevent tax dodging
According to the Financial Times, the European Union has asked the British government to align its stance on Chinese cars with Brussels’ trade policy. The tax difference between the two markets is raising concerns that some manufacturers could use the United Kingdom as a backdoor entry to the European market.
The basic idea would be simple: import a Chinese car into the United Kingdom under lower tariffs, before moving it into the European Union. Brussels wants to block this possibility by urging London to raise its own tariffs.
However, the British government does not appear willing to automatically follow the EU’s requests. A spokesperson reminded that the United Kingdom sets its own trade measures, based on its economic interests and those of its industry. The UK has left Europe to regain a degree of freedom in action and political decision-making.
The topic is especially important for British manufacturers. The country’s factories produce cars for the European market and also rely on parts sourced from the European Union. Being further detached from the EU could be catastrophic for these UK automakers.
The United Kingdom wants to stay close to Europe
This issue comes as the European Union prepares its new “Made in Europe” rules. Brussels aims to favor products made in Europe and to reduce dependency on Chinese components.
The UK could be penalized if it remains outside this framework. Prime Minister Andy Burnham has called for Britain to be considered a “trusted partner” by the EU. He argues that the British auto industry would suffer if its companies do not receive the same treatment as their European rivals.
For Brussels, the solution could lie in greater trade integration. The Financial Times indicates that the European Union has even discussed admitting the United Kingdom into the customs union. That would eliminate part of the tariff differences between the two markets.
