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The two sides are eyeing a technical workaround for the new duties, which take effect from January 2027.
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The border taxes would deal a second blow to British carmakers who are already at risk of being locked out of certain EU contracts under the terms of Brussels’ nascent Made in Europe industrial policy. | Chesnot/Getty Images
Exclusive
March 10, 2026
6:45 am CET
By
Graham Lanktree
and
Jon Stone
LONDON — Britain and the European Union are working to soften the blow of a Brexit trade deal cliff-edge that threatens to raise the cost of cross-channel electric vehicle exports by 10 percent.
Exports from several major automakers are set to be hit by duties at the U.K. and EU border from the start of next year.
Rules in the Brexit trade deal are tightening to require more of the vehicles and their batteries to be sourced from Europe rather than China.
But carmakers on both sides of the channel are struggling to develop domestic battery production fast enough to meet demand for EVs, exposing them to tariffs when the new rules kick in.
The duties would deal a second blow to British carmakers who also face being locked out of valuable EU deals under Brussels’ nascent
Made in Europe industrial policy
.
In a bid to minimize the impact of the new tariffs rules, London and Brussels are now negotiating how to define the chemical makeup of EV batteries as part of the 2026 review of the Brexit deal, two senior industry figures told POLITICO.
The hope is that a change in definitions could give manufacturers more leeway to meet trade rules — without reopening the hard terms of the Brexit trade agreement.
“I know there's dialogue going on,” Mike Hawes, chief executive of Britain’s SMMT auto lobby, told reporters at a major industry conference in London Thursday. “I don't think it's in anyone's interest to put additional tariffs on trade between the UK in the EU and electrified vehicles when both markets are trying to encourage the sale of those vehicles.”
Yet the “tinkering” with the U.K.-EU Trade and Cooperation Agreement (TCA) is unlikely to avoid making EVs more expensive throughout Europe, said a senior automotive industry figure. Like others cited in this report, they were granted anonymity to discuss the private talks.
The U.K. government declined to comment.
A European Commission spokesperson said: "The EU and the U.K. are committed to providing guidance on the matter ... Discussion are ongoing between the two with the aim to clarify the provisions of the TCA for our businesses on both sides of the Channel."
The workaround
The rules of the Brexit trade deal will tighten significantly from Jan. 1, 2027, with 55 percent of a vehicle’s value and 70 percent of the battery pack and battery cell
required to originate from the U.K. or EU
to dodge the new tariffs.
A last-minute deal struck in December 2023 delayed the new rules by three years, but Brussels said at the time they would not be extended again.
A senior European business representative confirmed that the U.K. and EU were in talks to “clarify” the rules of origin terms for batteries, noting this could provide some leeway for firms without delaying the changes again.
Exports from Jaguar Land Rover, Stellantis, Ford, BMW and other automakers are set to get hit by duties at both the U.K. and EU border from the start of next year. | Rui Vieira/PA Images via Getty Images
A technical group that deals with the rules of origin requirements in the TCA is discussing “the guidance for the definition of cathode active material,” said the senior automotive industry figure cited above. The high-purity metal oxide compounds enable the electrochemical storage and release of energy in lithium-ion batteries.
“At the moment, there are negotiations between the U.K. and the EU around how you define that and what the maximum levels of non-originating material for different parts of the battery could be,” they said.
London and Brussels are holding technical conversations about at what point in the supply chain firms can mix the different elements that go into the battery to count towards local content, the person added.Â
Lobbying fight
The discussions will lead to a lobbying “battle” between the chemicals and automotive sectors as each vies to have more or less Chinese manufacturing in the supply chain, the senior European business representative said.
Meanwhile, some automotive firms won’t be able to meet the requirements, they said, although this would depend on their market position and the supply chains of individual automakers.
“Everyone is aware that the battery supply chain hasn’t localized as fast as people hoped,” the senior auto industry figure said, noting that battery companies like Britishvolt have collapsed and other investments have been canceled.
To avoid tariffs on the trade in EVs between the EU and the U.K., governments in both London and Brussels “need to work with industry to agree a reasonable definition of what constitutes an originating cathode active material,” the U.K.’s Society of Motor Manufacturers and Traders
set out in a report
last year.
But this is all “tinkering” that won’t resolve the key issue of duties making EVs more expensive, the auto industry figure said. “There’ll be more clarity but, ultimately, people are not going to be compliant across all of their vehicle lines by Jan. 1, 2027.”
This story was updated to include a response from the European Commission. |
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# UK and EU scramble to soften post-Brexit auto tariffs cliff edge
The two sides are eyeing a technical workaround for the new duties, which take effect from January 2027.
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The border taxes would deal a second blow to British carmakers who are already at risk of being locked out of certain EU contracts under the terms of Brussels’ nascent Made in Europe industrial policy. \| Chesnot/Getty Images
Exclusive
March 10, 2026 6:45 am CET
By [Graham Lanktree](https://www.politico.eu/author/graham-lanktree/) and [Jon Stone](https://www.politico.eu/author/jon-stone/)
LONDON — Britain and the European Union are working to soften the blow of a Brexit trade deal cliff-edge that threatens to raise the cost of cross-channel electric vehicle exports by 10 percent.
Exports from several major automakers are set to be hit by duties at the U.K. and EU border from the start of next year.
Rules in the Brexit trade deal are tightening to require more of the vehicles and their batteries to be sourced from Europe rather than China.
Advertisement
Advertisement
But carmakers on both sides of the channel are struggling to develop domestic battery production fast enough to meet demand for EVs, exposing them to tariffs when the new rules kick in.
The duties would deal a second blow to British carmakers who also face being locked out of valuable EU deals under Brussels’ nascent [Made in Europe industrial policy](https://www.politico.eu/article/made-in-europe-debate-france-uk-brexit-trade-rules/).
In a bid to minimize the impact of the new tariffs rules, London and Brussels are now negotiating how to define the chemical makeup of EV batteries as part of the 2026 review of the Brexit deal, two senior industry figures told POLITICO.
The hope is that a change in definitions could give manufacturers more leeway to meet trade rules — without reopening the hard terms of the Brexit trade agreement.
“I know there's dialogue going on,” Mike Hawes, chief executive of Britain’s SMMT auto lobby, told reporters at a major industry conference in London Thursday. “I don't think it's in anyone's interest to put additional tariffs on trade between the UK in the EU and electrified vehicles when both markets are trying to encourage the sale of those vehicles.”
Yet the “tinkering” with the U.K.-EU Trade and Cooperation Agreement (TCA) is unlikely to avoid making EVs more expensive throughout Europe, said a senior automotive industry figure. Like others cited in this report, they were granted anonymity to discuss the private talks.
Advertisement
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The U.K. government declined to comment.
A European Commission spokesperson said: "The EU and the U.K. are committed to providing guidance on the matter ... Discussion are ongoing between the two with the aim to clarify the provisions of the TCA for our businesses on both sides of the Channel."
### The workaround
The rules of the Brexit trade deal will tighten significantly from Jan. 1, 2027, with 55 percent of a vehicle’s value and 70 percent of the battery pack and battery cell [required to originate from the U.K. or EU](https://www.gov.uk/government/publications/trade-and-cooperation-agreement-partnership-council-decision-number-1-2023-electric-vehicle-rules-of-origin/trade-and-cooperation-agreement-partnership-council-decision-1-for-2023-21-december-2023) to dodge the new tariffs.
A last-minute deal struck in December 2023 delayed the new rules by three years, but Brussels said at the time they would not be extended again.
A senior European business representative confirmed that the U.K. and EU were in talks to “clarify” the rules of origin terms for batteries, noting this could provide some leeway for firms without delaying the changes again.

Exports from Jaguar Land Rover, Stellantis, Ford, BMW and other automakers are set to get hit by duties at both the U.K. and EU border from the start of next year. \| Rui Vieira/PA Images via Getty Images
A technical group that deals with the rules of origin requirements in the TCA is discussing “the guidance for the definition of cathode active material,” said the senior automotive industry figure cited above. The high-purity metal oxide compounds enable the electrochemical storage and release of energy in lithium-ion batteries.
Advertisement
Advertisement
“At the moment, there are negotiations between the U.K. and the EU around how you define that and what the maximum levels of non-originating material for different parts of the battery could be,” they said.
London and Brussels are holding technical conversations about at what point in the supply chain firms can mix the different elements that go into the battery to count towards local content, the person added.
### Lobbying fight
The discussions will lead to a lobbying “battle” between the chemicals and automotive sectors as each vies to have more or less Chinese manufacturing in the supply chain, the senior European business representative said.
Meanwhile, some automotive firms won’t be able to meet the requirements, they said, although this would depend on their market position and the supply chains of individual automakers.
“Everyone is aware that the battery supply chain hasn’t localized as fast as people hoped,” the senior auto industry figure said, noting that battery companies like Britishvolt have collapsed and other investments have been canceled.
To avoid tariffs on the trade in EVs between the EU and the U.K., governments in both London and Brussels “need to work with industry to agree a reasonable definition of what constitutes an originating cathode active material,” the U.K.’s Society of Motor Manufacturers and Traders [set out in a report](https://smmtweb.lon1.cdn.digitaloceanspaces.com/wp-content/uploads/2025/09/2025-SMMT-Trade-Report-Unmarked-Routes.pdf) last year.
But this is all “tinkering” that won’t resolve the key issue of duties making EVs more expensive, the auto industry figure said. “There’ll be more clarity but, ultimately, people are not going to be compliant across all of their vehicle lines by Jan. 1, 2027.”
*This story was updated to include a response from the European Commission.*
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| Readable Markdown | 1. [News](https://www.politico.eu/news)
2. [Trade UK](https://www.politico.eu/section/trade-uk/)
The two sides are eyeing a technical workaround for the new duties, which take effect from January 2027.
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The border taxes would deal a second blow to British carmakers who are already at risk of being locked out of certain EU contracts under the terms of Brussels’ nascent Made in Europe industrial policy. \| Chesnot/Getty Images
Exclusive
March 10, 2026 6:45 am CET
By [Graham Lanktree](https://www.politico.eu/author/graham-lanktree/) and [Jon Stone](https://www.politico.eu/author/jon-stone/)
LONDON — Britain and the European Union are working to soften the blow of a Brexit trade deal cliff-edge that threatens to raise the cost of cross-channel electric vehicle exports by 10 percent.
Exports from several major automakers are set to be hit by duties at the U.K. and EU border from the start of next year.
Rules in the Brexit trade deal are tightening to require more of the vehicles and their batteries to be sourced from Europe rather than China.
But carmakers on both sides of the channel are struggling to develop domestic battery production fast enough to meet demand for EVs, exposing them to tariffs when the new rules kick in.
The duties would deal a second blow to British carmakers who also face being locked out of valuable EU deals under Brussels’ nascent [Made in Europe industrial policy](https://www.politico.eu/article/made-in-europe-debate-france-uk-brexit-trade-rules/).
In a bid to minimize the impact of the new tariffs rules, London and Brussels are now negotiating how to define the chemical makeup of EV batteries as part of the 2026 review of the Brexit deal, two senior industry figures told POLITICO.
The hope is that a change in definitions could give manufacturers more leeway to meet trade rules — without reopening the hard terms of the Brexit trade agreement.
“I know there's dialogue going on,” Mike Hawes, chief executive of Britain’s SMMT auto lobby, told reporters at a major industry conference in London Thursday. “I don't think it's in anyone's interest to put additional tariffs on trade between the UK in the EU and electrified vehicles when both markets are trying to encourage the sale of those vehicles.”
Yet the “tinkering” with the U.K.-EU Trade and Cooperation Agreement (TCA) is unlikely to avoid making EVs more expensive throughout Europe, said a senior automotive industry figure. Like others cited in this report, they were granted anonymity to discuss the private talks.
The U.K. government declined to comment.
A European Commission spokesperson said: "The EU and the U.K. are committed to providing guidance on the matter ... Discussion are ongoing between the two with the aim to clarify the provisions of the TCA for our businesses on both sides of the Channel."
### The workaround
The rules of the Brexit trade deal will tighten significantly from Jan. 1, 2027, with 55 percent of a vehicle’s value and 70 percent of the battery pack and battery cell [required to originate from the U.K. or EU](https://www.gov.uk/government/publications/trade-and-cooperation-agreement-partnership-council-decision-number-1-2023-electric-vehicle-rules-of-origin/trade-and-cooperation-agreement-partnership-council-decision-1-for-2023-21-december-2023) to dodge the new tariffs.
A last-minute deal struck in December 2023 delayed the new rules by three years, but Brussels said at the time they would not be extended again.
A senior European business representative confirmed that the U.K. and EU were in talks to “clarify” the rules of origin terms for batteries, noting this could provide some leeway for firms without delaying the changes again.

Exports from Jaguar Land Rover, Stellantis, Ford, BMW and other automakers are set to get hit by duties at both the U.K. and EU border from the start of next year. \| Rui Vieira/PA Images via Getty Images
A technical group that deals with the rules of origin requirements in the TCA is discussing “the guidance for the definition of cathode active material,” said the senior automotive industry figure cited above. The high-purity metal oxide compounds enable the electrochemical storage and release of energy in lithium-ion batteries.
“At the moment, there are negotiations between the U.K. and the EU around how you define that and what the maximum levels of non-originating material for different parts of the battery could be,” they said.
London and Brussels are holding technical conversations about at what point in the supply chain firms can mix the different elements that go into the battery to count towards local content, the person added.
### Lobbying fight
The discussions will lead to a lobbying “battle” between the chemicals and automotive sectors as each vies to have more or less Chinese manufacturing in the supply chain, the senior European business representative said.
Meanwhile, some automotive firms won’t be able to meet the requirements, they said, although this would depend on their market position and the supply chains of individual automakers.
“Everyone is aware that the battery supply chain hasn’t localized as fast as people hoped,” the senior auto industry figure said, noting that battery companies like Britishvolt have collapsed and other investments have been canceled.
To avoid tariffs on the trade in EVs between the EU and the U.K., governments in both London and Brussels “need to work with industry to agree a reasonable definition of what constitutes an originating cathode active material,” the U.K.’s Society of Motor Manufacturers and Traders [set out in a report](https://smmtweb.lon1.cdn.digitaloceanspaces.com/wp-content/uploads/2025/09/2025-SMMT-Trade-Report-Unmarked-Routes.pdf) last year.
But this is all “tinkering” that won’t resolve the key issue of duties making EVs more expensive, the auto industry figure said. “There’ll be more clarity but, ultimately, people are not going to be compliant across all of their vehicle lines by Jan. 1, 2027.”
*This story was updated to include a response from the European Commission.* |
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