Riffing on EV tariffs. Q: Are they working? A:No.

Tariffs. Like, do they work? Are they working in the EU context? Should the UK follow the EU’s lead and impose them on Chinese made vehicles?It depends on what you are trying to achieve, but if the goal is about protecting domestic manufacturers from unfair competition and accordingly grow their domestic market share, the early evidence from the divergent pathways of the UK and the EU are, respectively, no. No. And no. 

In fact they are about as useful as an air guitar which hasn’t been plugged in. 

As a reminder, the UK has 10% tariffs on imported vehicles, subject to certain exclusions where it has trade deals - which it has with the EU, but not with China. The EU had similar tariffs and has additionally announced further tariffs of 17.4% to 37.6% on Chinese electric car manufacturers. (Tesla is subject to lower tariffs, but we’re looking at Chinese-owned makers here - the main preoccupation of policy makers.)  These came into force on 4 July, subject to expected retrospective confirmation by EU member states. 

Therefore the UK has not followed in Brussels’ footsteps, and retains 10% tariffs, whereas the EU has 27.4% to 47.6% from July onward. How is that going? Will this air guitar produce a melody?

Here’s Exhibit A. Well, the only exhibit, so far, but we’ll look out for more: 

We took the sales figures for EVs - only EVs are subject to the tariffs - from the 4 largest Chinese-owned manufacturers operating in the UK and the EU, and we looked at their market share in July, and compared that with market share over the past 12 months. 

For the EU, New AutoMotive’s Global EV Tracker includes sales from Germany, Italy, Spain, the Netherlands, Sweden, Denmark, Finland and Portugal - 6 of the 8 largest EU markets plus a few more. Here is the news. 

So, here’s the story so far, tariff fans. The jurisdiction which increased tariffs had lower Chinese manufacturer market share to begin with, but it has since gone up. Meanwhile the jurisdiction which previously had slightly higher penetration by Chinese manufacturers but didn’t increase tariffs saw Chinese makers’ market share go down. 

Sure it’s early days, and the policy of tariffs which seems to be supported by approximately zero manufacturers and will make cars more expensive for consumers is no doubt brilliant and just waiting for us to recognise its genius. 

But so far Trade Secretary Jonathan Reynolds and the rest of Britain’s new Government seem to be doing the right thing sticking with the air maracas.