Brussels has warned [UK PM] Andy Burnham that Britain would need to raise tariffs on Chinese cars and more closely align with EU trade policy if it wants to avoid “made in Europe” barriers that would hit key exports.

In response to weeks of intense lobbying to secure equal treatment for UK products, the EU told London that its best solution would be to join the bloc’s customs union, according to two people familiar with the matter.

“A customs union would solve most of the problems of ‘made in Europe’,” said an EU official. “And also the question of tariff differences, which leads to fears the Chinese could avoid our tariffs by routing through the UK.”

The “made in Europe” policy is intended to favour EU manufacturers on subsidies and public procurement in an effort to defend the bloc against competition from China.

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“The concern today is no longer a hyper-competitive, globalised Britain on Europe’s doorstep, but a Britain that could become a backdoor into the European market for Chinese goods,” an EU official said.

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At the same time, the UK is pressing Brussels to include its car, chemical and energy supply chains in the bloc’s “made in Europe” agenda, which it fears could exclude British industry from valuable EU subsidy programmes.

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Nissan’s European boss Massimiliano Messina warned this month that the UK risked becoming a “corridor” into the EU for Chinese EVs. “The whole UK has to adjust some of [the country’s] tariff policy,” he said.

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In a sign of rising tensions between London and Brussels over differing approaches to trade with China, the EU this month announced it would monitor exports of titanium dioxide into Europe from the UK.

The EU move came after the UK’s competition authorities cleared China’s largest producer of the industrial whitening agent to purchase a plant in Teesside, north-east England, that went into receivership last October.

“The message is that if the UK doesn’t align in trade, it will lose a lot of access. The EU will protect more against the UK,” said Marie-Sophie Dibling, a partner at law firm Cassidy Levy Kent, which has represented the EU chemicals industry.

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The [UK’s} Department for Business, Innovation, Science and Trade said it was looking to explore deeper co-operation with the EU …

“We always put trade measures in place independently and based only on the UK’s economic interests and those of industry. However, Europe and the UK face many of the same challenges, which is why it is vital we protect trade flows between us,” it added.

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