Burnham urged to raise Chinese car tariffs to avoid EU trade hit

Brussels has urged Andy Burnham to raise tariffs on Chinese cars if he wants to avoid tougher trade barriers with the EU.

EU officials have told the Prime Minister that Britain must align its tariffs with those in the bloc to avoid falling foul of “made in Europe” regulations, according to the Financial Times.

This would mean Britain must impose tariffs of as much as 45pc on Chinese electric vehicles, up from its current 10pc levy.

Without action, the UK car industry faces new trade barriers under the “made in Europe” rules. These regulations aim to reduce the EU’s reliance on ‌Chinese components by ​requiring that a certain proportion of parts for things such as electric vehicles to be sourced from within the bloc.

The rules would hit Britain’s car industry, which feeds parts into EU supply chains and ⁠sells cars across the ​bloc.

An EU official told the FT that Britain should join the customs union if it wanted to avoid falling foul of the new rules. This would require the UK to have the same tariff regime as Brussels.

The official said: “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.”

Benjamin Haddad, France’s Europe minister, said at a briefing in London: “At the end of the day, if you are not part of the internal market and if you are not contributing to the financial capacity of the internal market, you don’t get the same kind of protection.”

Sébastien Martin, France’s industry minister, told reporters: “European taxpayers’ money should support [European] workers and European factories.”

Asked about the UK, he said: “The United Kingdom made a choice a few years ago to leave the European Union.

“That doesn’t mean that we don’t discuss things or that we don’t trade. It doesn’t mean that there can’t be agreements in certain sectors. But fundamentally there are those who have chosen the European project and those who have decided to leave.”

Mr Burnham has pledged to stick to Labour’s red lines at the last election, which prohibit rejoining the customs union or single market.

However, earlier this month he refused to rule out rejoining the EU, saying questions about the topic were “for another day”.

The Prime Minister could potentially introduce targeted tariffs on Chinese cars. But doing so would put him at odds with the Business Secretary.

Jonathan Reynolds warned this month that Britain could not risk imposing tariffs on Chinese electric vehicles because of the damage that Beijing would wreak on the UK economy in retaliation.

Mr Reynolds said any attempt to defend UK carmakers from an influx of cheap Chinese cars would be met with tit-for-tat measures that would ultimately harm exports.