Brussels Tells Britain to Tax Chinese Cars. The Alternative It Offered Is a Customs Union.

Brussels has told London that Britain should raise its tariffs on Chinese-built cars and move closer to EU trade policy, according to a Financial Times report published on 25 September 2026. The request came in response to British lobbying for equal treatment under the EU's incoming "made in Europe" rules, and the answer the bloc gave was blunt: the cleanest fix is a customs union.

The gap Brussels is worried about

The EU has applied anti-subsidy duties on China-built electric cars since 2024. They sit on top of the standard 10% import tariff and are set per exporter, which is why they range so widely.

Britain never followed. It applies the flat 10% and nothing else, and Business and Trade Secretary Jonathan Reynolds restated that position on 18 September. The result is a two-tier border on the same continent, and an unnamed EU official told the FT what Brussels fears it creates: "A customs union would solve most of the problems of 'made in Europe', and also the question of tariff differences, which leads to fears the Chinese could avoid our tariffs by routing through the UK."

Prime minister Andy Burnham has argued that the UK should be treated as a trusted partner under the incoming rules. Brussels' reply is that trusted partners charge the same tariffs.

Why a European Tesla buyer should care

Tesla is not a bystander here. The Model 3 sold in Europe is built in Shanghai, and it carries the EU's 7.8% anti-subsidy duty — the lowest rate any exporter received, because the Commission judged Tesla a smaller beneficiary of Chinese state support than the domestic brands. Tesla has challenged those duties in the EU courts.

A Shanghai-built Model 3 therefore lands more cheaply in Britain than in the EU, purely on duty. If the UK aligned, that advantage would go.

The second pressure point arrives on its own timetable. From 1 January 2027 the Trade and Cooperation Agreement's battery rules of origin bite, and ACEA has told Brussels that 82% of the EVs the EU expects to ship to Britain will fail them — about 426,000 cars facing a 10% tariff. That is the "made in Europe" barrier the UK is lobbying against, and it is the leverage Brussels is using.

What this is, and what it is not

This is a reported diplomatic position, not a decision. The FT cites one unnamed EU official; no minister on either side has announced a policy change, and the UK's public line eight days ago was the opposite of what Brussels is asking for.

It is also not an isolated move. The Commission has separately asked Beijing to cap hybrid exports to the EU at 15%, and Chinese brands took a record 11.7% of the European market in August. The UK number is higher still: Chinese brands took 15% of the British market in the first eight months of 2026, up from 4% in 2023, with no anti-subsidy duty holding them back.

For buyers, the direction of travel matters more than the diplomacy. Every scenario on this table ends with Chinese cars costing more in Britain, or EU-built cars costing more in Britain, or both.