Korean Media: "Chinese Cars Are Taking Over the Roads" … UK Considering Up to 45% Tariff

¬ 20% of the UK’s new car market is now occupied by Chinese brands

The Times reported on Wednesday local time that the UK, which has so far imposed no additional tariffs on Chinese electric vehicles (EVs), is now considering levying tariffs similar to those recently adopted by the European Union—up to 45.3%. This shift comes amid pressure from the EU, which warned that failure to raise tariffs on Chinese cars could jeopardize the UK’s eligibility for subsidies and tax incentives in the European market. Once hopeful about promoting affordable EVs and attracting Chinese investment, the UK is now reassessing its policy stance.

As imports of Chinese-made EVs continue to rise, South Korea has growing reason to monitor Britain’s decision. Should Hyundai and Kia—already facing competition from Chinese firms overseas—also see their domestic market share eroded, their capacity to invest in enhancing EV and software competitiveness may be undermined. Such a scenario risks not only declining sales for original equipment manufacturers but also reduced shipments for component suppliers, adverse impacts on regional employment, and long-term erosion of national automotive competitiveness.

Chinese-car share in the UK is double that in the EU

Data from the Society of Motor Manufacturers and Traders (SMMT) and the European Automobile Manufacturers Association (ACEA) show that from January to August this year, the combined market share of China’s five major automakers—Geely, Chery, SAIC, BYD, and Zeekr—in the UK new car market reached 19.7%. This marks nearly four times the 5% share recorded in 2021, and roughly double the 9.6% share observed in the EU during the same period. The figure includes electric, internal combustion engine, and hybrid vehicles.

One key factor behind the divergence between the two markets lies in tariff policy. According to assessments, the EU concluded that Chinese government subsidies may have harmed regional industries, leading it to impose retaliatory tariffs of up to 35.3% on Chinese EVs in 2024. Combined with existing tariffs, the effective rate could reach 45.3%. In contrast, the UK has maintained a baseline tariff of 10%. Chinese automakers, leveraging price competitiveness, have successfully introduced both EVs and plug-in hybrids into the UK market.

The UK still hosts manufacturing bases for Jaguar Land Rover, Nissan, and others. For these companies, the EU remains their largest export destination. The EU fears that Chinese auto investments in the UK could allow Chinese firms to circumvent EU trade barriers. As a result, the EU has linked the UK’s eligibility for inclusion in its “Made in EU” preferential production scheme—offering benefits to goods produced within the bloc—to the issue of Chinese EV tariffs. For the UK, pursuing Chinese investment risks undermining the export conditions of its existing automotive plants. Government officials told Reuters that no additional tariffs have been implemented yet, but discussions are underway with industry stakeholders, taking into account national industrial interests and strategic concerns.

China’s aggressive expansion stirs debate over production support in South Korea

South Korea is also grappling with the rising presence of Chinese EVs. As the domestic auto industry transitions toward electrification, Chinese vehicles are gaining rapid traction in the local market. During a period when automakers and suppliers need to invest heavily in new equipment and technologies, intensified price competition could jeopardize access to necessary funding.

Data from institutions such as the Korea Automobile Manufacturers Association (KAMA) indicate that Chinese-made EVs accounted for 35% of newly registered electric vehicles in South Korea during the first half of this year. This includes not only Chinese brands like BYD but also Tesla vehicles produced at the company’s Shanghai plant.

The industry argues that meaningful support measures must be strengthened to compete effectively with Chinese EVs, including raising non-tariff barriers. In practice, the Ministry of Trade, Industry and Energy has advanced a domestic production incentive tax system offering tax credits for EVs manufactured and sold in Korea. However, the Ministry of Economy and Finance excluded EVs from the scope of application. Meanwhile, the Ministry of Environment and Climate Action originally planned to introduce tiered subsidy payments based on contributions to domestic industrial activity and the development of charging and repair infrastructure. Yet, this reform has been significantly diluted compared to its initial intent. Industry sources stated: “If the UK cannot impose high tariffs on Chinese EVs as the EU has done, it should promptly implement alternative mechanisms—such as tiered subsidies or domestic production tax credits—that deliver tangible support.”

Source: Chosun Ilbo

Original article: toutiao.com/article/1878269905218560/

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