r/Economics • u/Rationalandcentred • 18h ago
News UK car industry faces ‘difficult trade-off’ between Chinese and EU markets
https://www.theguardian.com/business/2026/oct/04/uk-car-industry-trade-off-china-made-in-europe-laws21
u/Darkone539 18h ago
If the EU want us to match their import taxes then they have to offer something as part of a genuine deal. The "made in europe" offer was like the Fish and defence link - not the same deal, but a gateway.
If we sign a deal that is better overall then fine, but keeping EU car manufactures happy and costing the UK citizen more is not the answer.
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u/Upbeat_Parking_7794 17h ago
It is a valid choice for UK. No tariffs, cheap products for consumers. But then EU will create more barriers to the few car factories still existing in UK.
You just can't have it all.
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u/WhereTheSpiesAt 16h ago
The EU won’t do that though, they are losing out globally, the UK is their second-largest export market globally, the largest in Europe.
If their plan is to offer nothing but threaten barriers then the UK responds in kind and then the EU has just supercharged their main economies’ primary export issues, its not really a good threat or leverage, you can’t put barriers in place because you didn’t get what you think you deserve and simultaneously expect no response.
The issue here is the EU want it all, the problem is they have no leverage and so if they want to have the UK hit its own consumers with a wore deal somewhere, it needs to offer a better deal in another area.
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u/devliegende 14h ago
UK having leverage over the EU is the same nonsense fantasy sold by the leave crowd in 2016.
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u/WhereTheSpiesAt 14h ago
I didn’t say the UK had leverage, I said the EU don’t and if you believe so you are buying that same fantasy.
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u/devliegende 14h ago
You didn't say A > B. You said B < A.
My bad.3
u/WhereTheSpiesAt 14h ago
No. Someone not having leverage doesn’t mean someone else has leverage.
The UK can accept the status quo, the EU has no leverage, that doesn’t mean the UK has leverage, it simply means not budging.
Insane how arrogant that response is and yet how wrong you are at the same time.
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u/devliegende 13h ago
The UK has a choice between cheap Chinese cars or open trade with the EU. Only an idiot will think cheap Chinese cars is a win. You have to be a pretty big idiot to think the UK can win in a trade dispute with the EU.
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u/WhereTheSpiesAt 13h ago
Except it doesn’t. It has the choice of the TCA and Chinese cars. Only an idiot would forget that and get muddled up because they can’t understand a simple concept of no leverage.
The EU tariffs us, we tariff back and then the issue with German cars compounds massively.
You don’t have leverage, you can’t take on China on cars and also have tariffed imports to the UK because of your own actions.
It’s simple economics, you think you have leverage. You don’t, that doesn’t mean we have leverage, we can just accept the status quo.
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u/Darkone539 17h ago
Then the EU can create those barriers. We're not members, and have to do what's best for the UK.
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u/Z3r0sama2017 18h ago
If the UK still intends for all new cars after 2035 to be net zero then leaning towards China is a 'no-brainer'. With the CoL crisis only China can deliver cheap EV's in quantity to make it a reality. At best the EU would be able to provide the latter but never the former.
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u/obsessivesnuggler 17h ago
UK is automotive powerhouse, exporting cars and components to over 100 countries (majority in the EU). Doing research and patenting new technologies. On the other hand they are dependent on foreign investment so it is not in their interest to limit themselves with tariffs.
EU however wants to protect its manufacturers, and if UK doesn't limit Chinese influence then they become sort of Trojan horse for their car industry.
If only UK managed to keep steel and car production running instead of selling it to foreigners things would have been different.
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u/eastrandmullet 14h ago
UK need to drop the zero emissions targets if they want to save local and European manufacturing who cannot compete with the capex needed and still have so much IP.
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u/abdallha-smith 18h ago
Every 5 minutes this account post chinese ev articles on every economic subreddits
Then chinese nationalists creates comments chains amongst themselves and upvoting them to fabricate legitimacy.
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u/connor42 17h ago
The Chinese Jaecoo 7 was the most sold car in the UK last quarter and BYD sells 2 of the top 5 most sold EVs
Unless there’s a lot of secret CCP fans in the UK, it ain’t all a psyop
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u/Complete-Refuse-3262 17h ago
I just told the lil twat to go outside and touch some grass and the twat got upset lmao
British people are buying the Chinese cars if they didn’t want them they’d buy another brand
That’s how the free market works!
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u/abdallha-smith 16h ago edited 14h ago
China has been subsidizing its auto supply chain for 15 years: free land, bottomless zero interest loans,undercut raw materials, and heavily subsidized batteries.
This is pure, state backed dumping.
On top of that, they flood the market with aggressive financing deals and PCP rates that no local competitor can match without selling at a loss.
That’s not fair competition it’s state sponsored market distortion.
People jump on it thinking they’re getting the bargain of the century, completely oblivious to the fact that they're gutting our local manufacturing base.
Once the domestic competition is squeezed out and prices inevitably rise, nobody should be surprised.
Edit: it's facts
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u/connor42 16h ago
This logic makes sense if you’re Germany or the US with a large domestically owned industrial base that’s worth protecting. But the foreign owned UK car manufacturing sector is just not worth the downsides that would come with protecting it via tariffs or major subsidies
The total car jobs are going to decline no matter what because EVs are just much simpler than ICE
Foreign owned car manufacturers need to adapt or get outcompeted by new entrants, same as when the countries national champions entered our market
From a historical perspective, the UK Gov’t let their own car manufacturers go bust or get sold off due to better competition, I find it hard to believe they’ll try that hard to save someone else’s
From a current political perspective, the cost of living is major issues in the UK and I also doubt Burnham is going to be willing to reduce access to cheap cars for the sake of other countries economic interests
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u/abdallha-smith 15h ago
Nissan sunderland is thousands of UK engineers, technicians, and local suppliers powering a massive chunk of the north east economy.
Allowing state subsidized dumping to wipe out local manufacturing under the guise of "cheap cars for consumers" is the exact same mistake the UK made with coal and steel.
Short-term consumer gain for permanent industrial destruction.
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u/Complete-Refuse-3262 17h ago
The bots are not the ones buying Chinese ev’s and cars its the British people
Maybe go outside and touch some grass
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u/Rationalandcentred 18h ago edited 18h ago
The UK is an outlier in choosing not to put import taxes on Chinese vehicles, even as the US has shut them out almost entirely, and the EU imposes duties of up to 45%.
EU officials reportedly warned Andy Burnham last month that the UK must put tariffs on cheap Chinese vehicles otherwise Brussels would impose protectionist “made in Europe” barriers on British exports to the bloc, hitting British carmakers in their largest market.
And before anyone compares this to Trump tariffs on Canada, the EU is doing this to protect manufacturing jobs. That’s the difference
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u/ScienceMechEng_Lover 18h ago
This is just the EU proving they're no different to China or the US tbh. They can ask the UK to tariff Chinese cars when they stop scamming buyers through crap like a VW Passat starting at £40k.
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u/Complete-Refuse-3262 18h ago
And the consumers have to pay more in an already ailing economy
What a good idea!
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u/Ferreman 18h ago
Chinese cars are made with subsidies from the Chinese state. This way they are able to sell cars even at a loss to undermine the local producers.
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u/ScienceMechEng_Lover 18h ago
How much government support does VW get? How much government support does GM and Ford get? How much government support does Renault get? Jaguar Land Rover isn't even competing in the same segment as the Chinese. There's no reason for the UK to nerf foreign cars from one country (China) in favour of other foreign cars (Germany, Japan etc.).
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u/Ferreman 18h ago
They might get governmenr support now and then. However Chinese companies get their entire funding from state owned banks. Everything from start to finish is state owned. They sell at a loss on purpose to undermine and destroy local manufacturing.
You might want to look how they did the exact same thing with clothing in Africa. Same playbook.
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u/ScienceMechEng_Lover 17h ago
What proof do you have? Chinese companies are making better cars because they invested significantly in EVs compared to European and American manufacturers who rested on their laurels. If you look at the amount of subsidies VW, GM, Ford etc. get, you'd realise they're no different and they're only suffering because they didn't invest enough in R&D.
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u/Ferreman 17h ago
By the investigation by the EU Commission lol, the conclusion is available online.
The land on which they build the cars was subsidized by the government, the loans they used are from state owned banks, even the lithium made for the batteries comes from subsidies. The entire chain is subsidized. Basically, Chinese cars half sponsored by the Chinese government, which makes it impossible for any company to compete in any fair way. This is also why they are able to sell at a loss to undermine local manufacturers even further.
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u/ScienceMechEng_Lover 17h ago
Lets see how VW got land for its factories then. China built infrastructure to enable their transition to EVs, which is what allows Chinese manufacturers to efficiently procure materials for their batteries, chassis etc. and build vertically integrated supply chains whilst European and American manufacturers were busy blowing their subsidies on satisfying shareholders and circlejerking. You're just upset that the Chinese beat the EU at its own game: free market capitalism.
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u/Ferreman 16h ago
China subsidized the entire chain, which is not free market. They subsidize the raw materials, the loans, the land. There is not a single part that is not subsidized. This means that they don’t even have to make money because they are pretty much government owned.
Not a single company can compete with a company that is pretty much state owned and receives that much grants, loans and subsidies. This goed against competition on equal footing.
This goes against WTO rules on free trade.
The Chinese are outcompeting because of state subsidies, not because of efficiency. If they would compete under the same rules as a company from Europe, their cars would be at minimum 50% more expensive. Probably even more, because they wouldn’t be allowed to sell at a loss.8
u/Ok-Industry120 18h ago
All countries do. Not a valid point
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u/Ferreman 18h ago
No they don’t. There might be subsidies, but they are not to the point of what China does. You also have to keep in mind that these companies receive their funding from state owned banks.
Also, China does this on purpose to undermine local manufacturing. This is how they destroyed local manufacturing for clothing in Africa btw. Its the exact same playbook.
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u/reflyer 17h ago
Interesting, so you mean investing in state-owned banks is bad, but private banks are fine?
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u/Ferreman 17h ago
If all their loans come from state owned banks, then yes. Because if you want to participate in free trade, then you have to play on an equal foot.
But for Chinese car manufacturers it goes even further, the land they use for the factories is subsidized, the loans they take are state subsidized, the raw materials they use are state subsidized. Every chain in their manufacturing process is state subsidized.
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u/reflyer 16h ago
If you believe that Chinese companies receiving state support across land, loans, raw materials, and manufacturing processes violates the spirit of a free market, why didn't you ban European battery manufacturer Northvolt when it received state support across those exact same areas of land, loans, raw materials, and production?
Is it suddenly "guilty" simply because the backing funds come from a Chinese bank rather than Volkswagen, BMW, the European Investment Bank, or InvestEU?
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u/Ferreman 15h ago
Its not something "I believe", its something that is proven and widely known.
Northvolt did not receive as many grants, loans and subsidies as the Chinese give their manufacturing. In fact the comparison is pretty bad because this is about an industry that was lacking in Europe and is important for the future. Its normal that investments are made there and I never said that investments are bad.
Its just that the amount of subsidies the Chinese give to all of their manufacturing companies is out of proportion. Most of these companies could be considered state owned companies.Ill give you an example. A decade ago the Chinese were dumping their steel on the European market. They overproduced steel that they couldn't sell in China and dumped it on our markets at a loss.
The EU wanted to intervene but ofcourse, the Brits refused. The manufacturing of steel was pretty much completely dismantled by the Chinese in the UK with the loss of thousands of jobs. The last steel manufacturers fell into Chinese hands and they wanted to close it.This would have made the UK dependable on Chinese imported steel, this would mean that if the UK wanted to make shells, tanks or other steelmade products, it would have to ask the CCP for permission.
Short term thinking of wanting cheap goods is a real danger for the prosperity of Europe as a whole and it even creeps into the danger of our national defense.
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u/Euiop741852 15h ago
So your point is doing the exact same but less = good, then how do you quantify that line between good and bad? In fact the comparison is pretty bad because this is about an industry that was lacking in Europe >> The EV industry was also lacking in China until they did what the Eu gave to Northvolt, so your argument is?
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u/YoungYorghut 17h ago
Name one country where Chinese car brands are selling at a loss to undermine local competition?
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u/Ok-Selection-8598 17h ago
Hahaha the irony in saying that on a topic where the EU is literally fighting for European manufacturers.
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u/Ferreman 17h ago
Because the entire chain of Chinese cars is subsidized, which goes against the WTO rules on free trade. Europe does not do this.
How can any company compete against another company when their loans are state subsidized, the land of their factories is state subsidized, their raw materials are state subsidized?
Please explain this.
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u/abdallha-smith 16h ago
China has been subsidizing its auto supply chain for 15 years: free land, bottomless zero interest loans,undercut raw materials, and heavily subsidized batteries.
This is pure, state backed dumping.
On top of that, they flood the market with aggressive financing deals and PCP rates that no local competitor can match without selling at a loss.
That’s not fair competition it’s state sponsored market distortion.
People jump on it thinking they’re getting the bargain of the century, completely oblivious to the fact that they're gutting our local manufacturing base.
Once the domestic competition is squeezed out and prices inevitably rise, nobody should be surprised.
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