France is blocking Britain from EU industrial rules, and a 10% car tariff looms

“Fundamentally, there are those who have chosen the European project and those who have decided to leave,” Sébastien Martin, the French industry minister, said of Britain’s place in the EU’s industrial plans.

That position has placed France at the centre of a dispute over whether the UK can be included in the EU’s proposed Made in Europe rules. France has argued that Britain, which left the EU in 2020 while retaining a free-trade arrangement with the bloc, should be excluded.

The argument turns on the Industrial Accelerator Act, unveiled in March 2026. The measure is intended to increase the bloc’s industrial capacity and support decarbonisation as Brussels seeks to compete with China and meet its climate goals.

Its rules would require low-carbon and/or EU-made content in goods bought through public procurement or auction, and in products manufactured with state subsidies. Brussels wants manufacturing to make up 20% of the bloc’s gross domestic product by 2035, from 14% at present.

The act is chiefly directed at China, which has a £1bn a day trade surplus with the EU.

France’s objection has been that Britain should not receive European protections while preserving an independent trade policy after Brexit. Germany has taken a wider view, supporting “Made with Europe” criteria that would cover approximately 80 countries, including the UK, with free-trade agreements with the EU.

The EU has urged Britain to introduce tariffs on imported Chinese vehicles, matching tariffs the bloc imposed in 2024. Jonathan Reynolds, the UK business secretary, said during a trip to India that such tariffs were “not on the cards at the moment”.

For carmakers, the dispute has a more immediate consequence. Under the TCA, car exports are tariff-free when they are mainly made in Europe. The EU and the UK, however, cannot produce enough electric batteries to compete with China, meaning cars sent to one another’s markets would face a 10% tariff from next year.

That tariff had been scheduled to begin in 2024, before being suspended for three years to give the industry more time. The European Automobile Manufacturers’ Association, known as ACEA, is seeking an urgent suspension of plans for the tariff on UK electric vehicles imported into the EU and EU electric vehicles exported to the UK.

Jonathan O’Riordan, ACEA’s international trade director, said the deadline for the tariffs was less than three months away. The UK’s Society of Motor Manufacturers and Traders has said exclusion from the Made in Europe group would put shared investment at risk, along with a trading relationship worth €80 billion ($90.1 billion).

Ola Källenius, head of Mercedes-Benz and ACEA’s president, said leaving the UK outside the legislation would be a “deliberate choice” to “hurt” the car industry. He said it would “worsen the competitiveness of your own industry”.

Andy Burnham has lobbied for British inclusion, encountering particular resistance from France. The prime minister intended to raise the matter at the UK-EU summit on 20 November.

Negotiations have slowed seven months after the act’s unveiling as it moves through EU procedures. EU leaders were aiming for political agreement on the current text by December, though disagreement over the Made in Europe requirement could carry the negotiations well into 2027.