Fears over cheap imports of Chinese electric vehicles (EVs) have created a growing trade dispute between the Asian nation and many trading partners in the West.
Amid concerns about its own domestic market, but with an increasing number of retaliatory Chinese trade probes being launched, will the UK follow in the footsteps of the US and EU and apply tariffs on EVs?
UK-China trade
The most recent release of trade data from the Department for Business and Trade (DBT) suggests that there has been a sharp increase in Chinese auto imports, despite an overall decline in bilateral trade, in the year up to April 2024.
In the year up to April 2024, UK imports of Chinese cars were up 21% on figures from the previous year, while total Chinese imports were down 19.2% (£13.4bn). Car imports make up 8.7% of the UK’s overall imports from China.
UK car industry
Nonetheless, UK industry has advocated for EV tax cuts to stimulate flagging sales, with the Society of Motor Manufacturers & Traders (SMMT) suggesting:
· The government halves VAT on new battery electric vehicles for three years
· Makes EVs exempt from additional vehicle excise duty applying to cars costing over £40,000
· Reposition VAT on the cost of charging EVs, between the 5% applied on home charging and the 20% on street charging
However, some commentators have suggested that measures to boost domestic industry won’t be sufficient to compete with cheap Chinese imports, especially as other nations apply tariffs to level the play field.
Consultancy Schmidt Automotive Research found that China’s EV industry is now setting its sights on the UK, as well as Norway, as potential export growth markets.
CEO Matthias Schmidt described the UK as a “major catalyst” for the country’s car industry growth this year.
Pork probes
However, some commentators have suggested that measures to boost domestic industry won’t be sufficient to compete with cheap Chinese imports, especially as other nations apply tariffs to level the playing field.
According to Politico Morning Trade, the UK’s pork industry expressed concerns after China began an investigation into EU pork, targeting Spanish, Danish and Dutch producers.
Reuters reported last week (30 August) that Spain’s prime minister Pedro Sánchez is set to visit China next month to discuss the probe.
Spain is Europe's largest pork exporter, supplying 22% of China's imported pork in 2023, worth US$1.29bn, which means it has the most to lose of any of the bloc's members.
Retaliatory tactics
China has launched a series of anti-subsidy and anti-dumping investigations.
After Canada mirrored the US and applied tariffs to Chinese EVs last week, Beijing responded with a probe into the Canadian canola industry – with Canada the world’s biggest exporter of the plant and China its second largest market – claiming the North American nation is dumping canola into its market.
In addition to pork, a probe into subsidies for eight EU members’ dairy industries was launched late last month (21 August), following the bloc’s publication of its provisional tariff amounts for Chinese EV makers.
Pressure easing?
However, China has taken a more conciliatory approach to the dispute in recent weeks, choosing not to apply to tariffs to French brandy imports, despite an investigation finding that major exporters had been dumping their products.
It was also reported that Chinese industry bodies had come forward with proposed cost and volume caps for EV exports in a bid to sway EU member states from supporting the bloc’s provisional tariffs this October.