The UK is preparing to impose import levies on Chinese electric vehicles to meet a key demand from the European Union, the Times of London reported, in a blow to a group that now accounts for nearly one in four cars sold in the country.

Brussels has made clear that the UK faces being cut from the Made in Europe local-content rules if it doesn’t act on the tariffs, the newspaper said, adding that EU officials are concerned the UK could become a backdoor for Chinese exports into Europe.

UK officials are concerned about Chinese retaliation against Jaguar Land Rover Automotive Plc but have determined the potential economic fallout of being dropped from the Made in Europe mechanism would be far more damaging, the Times said, without stating how the information was obtained.

London introducing import duties would be a setback to Chinese automakers. Brands including BYD Co., SAIC Motor Corp.’s MG and Chery Automobile Co.’s Jaecoo have expanded quickly in the UK, where they don’t face the additional tariffs on EVs currently in place in the EU. They grabbed 23% of British new-car sales in September, with the Jaecoo 7 the country’s best-selling new model.

The sport utility vehicle, which starts at around £30,000 ($39,725), has been dubbed the “Temu Range Rover” on social media for being a cheaper version of the British luxury brand, in a nod to the Chinese discount marketplace.

In the EU, Chinese brands are instead expanding with hybrid vehicles that aren’t yet hit with levies. In many cases, their EVs remain competitive even after tariffs. Companies led by BYD are also setting up local production to sidestep the duties.

The European Commission, meanwhile, has proposed the local-content rules to defend its industry. The measures could restrict key subsidies to vehicles manufactured in the bloc and exclude the UK operations of automakers like Land Rover and Nissan Motor Co. To be given equal treatment, the UK may also have to slap tariffs on Chinese EV imports, a Nissan executive said last month.China’s automakers likely won’t be deterred from their export push by rising trade barriers, as fierce price competition continues in their home market.

“Tariffs come and go but it won’t change our investment in the UK,” Victor Zhang, UK managing director of Jaecoo and Omoda, which is also owned by Chery, recently told reporters on a call. “We are here to stay.”

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