Downing Street's position

Downing Street said on Friday it would welcome the objective of the UK being included in the Industrial Accelerator Act, after France dropped its opposition to Britain joining. At the same time, No 10 left open the option of imposing tariffs on Chinese-made electric vehicles under the Made in Europe package - a move Beijing warned would be discriminatory.

The Chinese embassy in London said it was firmly opposed to any discriminatory practice involving tariff hikes or restrictive measures on Chinese products, and said it had expressed serious concern to the UK side about the reports, arguing that trade protectionism runs counter to WTO rules and market principles.

A No 10 spokesperson said it was premature to speculate on the terms of any deal and that there was still a European process to run, adding that the UK has its own trade policy, keeps all tariffs under review, and works closely with the British automotive sector to reflect its best interests.

The price of joining

The entry terms are set out in a Franco-German proposal made on Thursday night: the UK would have to dynamically align with EU trade defence measures, including the tariffs the bloc imposed on Chinese EVs in 2024. Joining would also require accepting dynamic alignment on EU conditions related to third countries' investments.

The proposal includes an opt-in for European partners who were part of the EU single market as of 1 January 2020, a definition that covers both the UK and Norway. Downing Street's welcome for the inclusion goal followed France dropping its opposition to Britain joining.

Split voices at Westminster

The government's own ministers do not speak with one voice. Business secretary Jonathan Reynolds said this week he would not be coerced into aligning with the EU's policy. Trade minister Anas Sarwar hinted on Thursday the UK was minded to align, telling Politico the UK and the EU must "work together and act in lockstep" against China's automotive dominance.

Liam Byrne, the Labour chair of the parliamentary business committee who is leading an investigation into the UK's position on China, went further. He said imposing tariffs on Chinese EVs would be "a small price to pay" to save the industry in the UK and EU, and criticised the government's approach as naive and based on false hopes that China will change its export policy.

Stakes for the car industry

The government fears billions of pounds of trade in the car industry could be lost if the UK is locked out of EU supply chains. Chinese brands are pressing hard into the market:

• BYD sales rose 78% year on year in September
• Chery sales rose 660%
• Changan's market share grew by more than 3,000%

Tariffs could protect UK manufacturers from cut-price Chinese models, but could raise consumer prices and harm British makers selling to China. About 80% of UK-made cars are exported, with more than half going to the EU and 6% to China. Ola Källenius, Mercedes-Benz boss and ACEA president, warned that locking the UK out would be a deliberate choice by EU leaders to hurt the car industry across the bloc.

Timing matters too: under WTO rules quotas can be introduced within months, but imposing tariffs on Chinese cars could take more than a year, starting with notification of an investigation and evidence-gathering over alleged harms. EU lawmakers are expected to finalise the Industrial Accelerator Act by the end of the year or early 2027; MEPs have already tabled 5,100 amendments, including one embracing the UK.