Maroš Šefčovič and Jonathan Reynolds have been working on EU vs UK electric vehicle tariffs to avoid a 10% duty on cross-channel EV exports from the start of next year. The European Commission and the U.K. are trying to keep vehicles moving tariff-free under Brexit trade rules before the change bites.
Šefčovič told Reynolds the extra duties were in neither side’s interest and said he was “working to avoid a tariff cliff edge” during their meeting on the sidelines of last week’s G20 trade ministerial in Milwaukee. Under the Brexit trade deal rules of origin, an electric vehicle can cross the Channel tariff-free if at least 55% of the vehicle, at least 70% of the battery pack and 65% of the battery’s cells are made in the EU or U.K.
Milwaukee talks on EU terms
The European Commission said it was aware of certain challenges related to the implementation of those rules of origin. Olof Gill said the European Commission “remains committed to sending a strong market signal for zero-emission vehicles, while supporting the production of vehicles, batteries and cathode materials that are made in the European Union.”
The talks have centered on a technical workaround that would clarify the rules on the level of cathode active material used in lithium-ion batteries that could come from third countries like China. That detail matters because it could change how many EVs stay inside the tariff-free lane when the new duty starts.
SMMT warns on £16.4 billion
Britain’s automotive lobby, the SMMT, estimates that the additional tariffs would threaten £16.4 billion in cross-channel trade in EVs. Mike Hawes said, “Additional costs on the very vehicles that British and European consumers are being encouraged to buy would be self-defeating,” and added: “At a time of intensifying global competition, the U.K. and EU should find solutions that strengthen our industrial cooperation and integrated supply chains, not create new barriers that would undermine competitiveness, jeopardise investment and restrict consumer choice.”
The warning is not abstract. Vehicles that miss the local content test would face the 10% duty from the start of next year, and the SMMT’s figure shows how much trade sits close to the line. For manufacturers, the practical question is whether battery supply chains can be adjusted in time to keep more models eligible.
China tariffs and Industrial Accelerator Act
The complication is political as well as technical. Some EU officials are warning that Britain’s automotive sector will not be counted as European if London does not align with EU tariffs on Chinese EVs, while British ministers have been lobbying Brussels so U.K. automakers qualify as European for access to public procurement contracts, tax incentives and subsidies under the Industrial Accelerator Act.
An EU official warned that “trade policy could become a Trojan horse for China.” Chinese state-subsidized vehicles have faced additional tariffs as high as 35% since 2024, while the U.K. has not imposed tariffs. The result is a narrow negotiating lane: keep the current export route open, or let the new duty hit vehicles that fail the origin test from the start of next year.
Will the EU and the U.K. reach a technical workaround before the tariffs take effect at the start of next year? The answer now sits with the two sides’ trade teams, which have already shown enough progress in Milwaukee to keep the talks alive.
