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News & Press: International Trade News

Government sets out import tariff plans for no-deal Brexit

13 March 2019   (0 Comments)
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snapshot of new tariff rates

The UK government has set out its long-awaited 'no-deal' trade plans after Prime Minister Theresa May's exit agreement with the EU suffered a second defeat yesterday.

The plans would mean that 87% of imports would be eligible for zero-tariff access.

At the moment 80% of imports are tariff free.

Tariffs would be maintained to protect some industries, including agriculture. Beef, lamb, poultry and some dairy products would receive protection. Prices of beef will go up by almost 7% and cheddar cheese up by about £20 per 100kg.

The new tariff regime would mark a shift in favour of products from non-EU countries.

It would mean 82% of imports from the EU would be tariff-free, down from 100% now.

92% percent of imports from the rest of the world would pay no border duty, up from 56%.

Under the plan, the UK car industry will receive some protection, with some imported cars attracting tariffs.

But car parts from the EU would be tariff free, which will help car plants in the UK.

Also, the ceramics industry would receive some protection from cheap imports.

Where are the big changes?

Industry bodies and businesses are still poring over the 1,477-page document which outlines the new plan. Any industry benefiting from protective tariffs will have to weigh up whether they will be met by export tariffs.

Imports of cars from the EU will have a tariff of 10.6% applied, which would add £1,500 to a typical family car. Volkswagen has already said the cost would be passed on to the buyer.

Car parts such as engines would have no new tax applied to avoid disruption to the movement of components.

The new tariff schedule would apply for 12 months after a no-deal departure, while the government consulted on a new, permanent approach to tariffs.

Due to World Trade Organization rules, the UK would have to impose the same tariffs on goods from the EU and from other countries around the world if it left without a deal. Other countries are under no obligation to reciprocate by cutting their own tariffs for British imports.

Trade Policy Minister George Hollingbery said: "Our priority is securing a deal with the EU as this will avoid disruption to our global trading relationships. However we must prepare for all eventualities."

He said the government's plan "represents a modest liberalisation of tariffs".

"This balanced approach will help to support British jobs and avoid potential price spikes that would hit the poorest households the hardest," he said.

How will the Irish border system work?

The government also announced that it will not introduce any new checks or controls, or require customs declarations for nearly all goods moving from across the border from Ireland to Northern Ireland in the event the UK leaves the EU without a deal.

The decision to drop all checks to avoid friction at the UK's land border with the EU will be temporary while longer term solutions are negotiated and was taken to recognise what the government described as "the unique social political and economic circumstances of Northern Ireland".

The government said tariffs will be payable on goods moving from the EU into the rest of the UK via Northern Ireland.

It insisted that this would create no border down the Irish sea because there would be no checks on goods moved between Northern Ireland and Britain.

However, there would be new checks away from the Irish border to protect the biosecurity of the island of Ireland. That would involve setting up a new 'designated entry point' in Northern Ireland where animals and animal products from outside the EU would require certification and pre-notification before arriving in the rest of the UK.

View the full list of temporary rates of customs duty on imports after EU Exit.