UK will not put tariffs on Chinese vehicles, says Jonathan Reynolds

Exclusive: Business secretary says he will not change trade rules due to EU pressure and denies UK will become a ‘back door’ for cheap imports

The business secretary has hit back at European demands for British tariffs on Chinese imports, saying the government will not change its trade rules because of pressure from Brussels.

Jonathan Reynolds warned that the government would not bow to calls from other countries for the UK to hit Chinese vehicles with import taxes, despite political pressure to align with the EU in exchange for deeper future economic ties.

The EU imposed tariffs on Chinese electric vehicles in 2024 and last Friday agreed a 350,000 a year quota on Chinese hybrid cars amid fears cheaper alternatives are causing deindustrialisation and job losses.

Reynolds conceded that levying sanctions on Chinese goods was an option in the future, but he dismissed concerns from Brussels that the UK could provide a back door to the European market.

His comments highlight the divisions that remain between the UK and EU on trade and industrial policy, which could derail the prime minister’s attempts to move closer to Brussels.

“In 2024, [we] looked at this issue carefully, and we keep it under review depending on what the needs of industry are … But it comes down to what is the fundamental nature of the UK automotive sector. It’s an export-led sector, so that’s what I’ve got to take into account.”

With Europe having imposed tariffs of up to 45% on Chinese electric cars, some believe that the UK has opened an alternative route into the EU for Chinese companies setting up in the UK to sell into the bloc.

Nissan, for instance, has agreed to look at building cars in northern England for the Chinese manufacturer Chery .

Reynolds rebutted those accusations, however, saying: “The UK currently has no major Chinese manufacturer based in its automotive sector, so we’re not making vehicles here and sending them to the single market through some sort of back door.”

His comments raise the stakes ahead of intense final weeks of negotiations before the long-awaited UK-EU summit, which Andy Burnham confirmed this week would be held in Brussels on 20 November.

The prime minister told the Commons on Monday he wanted a “serious dialogue” over the UK’s place in Europe, as he framed the summit as a possible first step to EU membership.

The new Made in Europe trade rules aim to protect European companies from subsidised Chinese imports, but British manufacturers worry they will also be shut out of supply chains.

The issue will not formally be on the agenda at the November summit, but British officials are hoping to use those talks to shape the European legislation.

Diplomats on both sides of the Channel say the summit will now be an early test of whether Burnham’s desire for a “real reset” in UK-EU relations is likely to bear fruit.

One EU official said this week that the UK’s negotiating position would determine whether it was worth pursuing more fundamental changes such as British access to the single market, a new customs union or re-accession.

Some in Brussels have been pushing for Britain to levy tariffs on Chinese electric vehicles in return for getting access to the European market under the new trade rules.

Reynolds has previously dismissed such an option in part because of the risk that Beijing could hit the UK with reciprocal tariffs, damaging British companies such as Jaguar Land Rover.

He said it would be to Europe’s detriment if it did not admit the UK into the scheme. “If you look at the impact analysis of such a policy, the consequences for the EU [of] excluding the UK are much more difficult,” he said.

“This is not just in the UK’s interest; it’s not in the EU’s interest because obviously we have integrated supply chains.”

Reynolds said the summit was an important milestone in EU-UK relations but also insisted that new trading terms for electricity, emissions and food and drink products would be a major achievement in themselves.

Speaking from a two-day trade delegation to Delhi and Mumbai, he acknowledged that the landmark free trade agreement he helped strike last year with India would become defunct if Britain does rejoin the EU.

“That’s why obviously when we were part of it, we didn’t have these separate bespoke arrangements.”

But he insisted that it remained worth continuing to push to broaden the scope of the agreement, as he unveiled a series of UK-India investments which officials say are worth over £1bn to the UK over the next 15 years.

The deal has already begun to reduce the price of Scotch whisky in Indian shops, after tariffs were reduced from 150% to 75%. Now British officials are keen to free up trade in services as well as goods, for example, pushing for both countries to recognise each other’s legal qualifications.

“There are some specific things regarding who can practice law and in which area,” Reynolds said. “I am confident over the medium to long term that this will improve over time.”

He added: “We’ve got to be cognisant of this long-term position with the EU. But frankly, there’s a job to be done here and now, which we’re doing.”