Never miss another update

Subscribe Today!

UK sets out post-Brexit tariff regime

The price of food and cars imported to the UK from Europe would rise sharply under a new tariff regime set out on Tuesday if the EU and UK fail to reach a deal on their post-Brexit relationship.

The plans, announced by trade secretary Liz Truss, would seek to keep tariffs low on a wide range of products, but they also include 10 per cent duties on cars, and levies on beef, butter and poultry as well as protections for the ceramics industry.

The levies would apply to trade with any countries with which the UK does not have a preferential trade deal at the end of its post-Brexit transition period, which expires at the end of this year. Britain will leave the EU’s customs union and do business with the bloc on basic World Trade Organization terms unless it has other agreements in place. Talks between the UK and the EU hit an impasse last week.

The Department for International Trade said Britain would scrap all levies on £30bn of imports as part of its new “MFN (most favoured nation) tariff regime” called the UK Global Tariff.

Under the MFN tariff regime products with tariffs at present below 3 per cent will see those reduced to zero, including fridge freezers and dishwashers, Christmas trees, mirrors and scissors.

The tariffs on imported cars are designed to protect the UK car industry, but could lead to the price of an imported car jumping by several thousand pounds.

Meanwhile, the agricultural tariffs are supposed to protect British farmers who are worried about a flood of cheap imports entering the country. Cabinet ministers are engaged in a prolonged dispute over US demands for agricultural tariffs to be slashed as part of a US-UK trade deal.

Ms Truss said that the UK would be able to set its own tariff regime, “tailored to the UK economy”, for the first time in 50 years.

“Our new Global Tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products,” she said.

“With this straightforward approach, we are backing UK industry and helping businesses overcome the unprecedented economic challenges posed by coronavirus.”

A year ago the DIT set out draft proposals that would have eliminated tariffs on 87 per cent of products.

Now, by contrast, it says that it is aiming for an initial 60 per cent of UK trade to be tariff-free under the new rules — and that the figure should rise as more trade deals are struck.

The department said 47 per cent of trade is tariff-free for the UK at present, because of transition arrangements with the EU, meaning an extra £30bn of trade would be tariff-free from next year.

This article was first published at https://www.ft.com/content/057460b4-3716-4ab5-bd08-a1c2eca56983

Posted in

The Markets Today