UK Government announces temporary tariffs

The Government has published details of the UK’s temporary tariffs for a ‘no-deal’, designed to minimise costs to business and consumers while protecting vulnerable industries.

A spokesman for the Department of International Trade explained the tariffs were released just hours ahead of Parliament’s vote on whether the UK should leave on March 29 without a deal to ensure MPs were fully informed.

While the tariffs are only designed to be temporary – lasting for up to 12 months – they will still have a major effect on businesses across the country.

The Government has said it will closely monitor the effects on the UK economy, committing to carry out a full consultation and review on a permanent approach.

Under the terms, British businesses will not pay customs duties on the majority of goods when importing into the UK if we leave the European Union without an agreement.

Under the temporary tariff, 87% of total imports to the UK by value would be eligible for tariff-free access. Tariffs would still apply to 13% of goods imported into the UK.

These would apply equally to all other trading partners, except for those where the UK has a free trade agreement in place and around 70 developing countries that will benefit from preferential access to the UK market.

Agricultural industry

A mixture of tariffs and quotas on beef, lamb, pork, poultry and some dairy products will be applied to imports to support UK farmers and producers who have historically been protected through high EU tariffs.

National Farmers’ Union analysts highlight that the key impacts on farming are:

  • Full protection for the sheep meat sector: No additional market access and no reduction in the Most-favoured-nation (MFN) quota.
  • Tariff-rate quotas (TRQs) for beef and for poultry;
  • No TRQs for dairy. However, tariffs will apply to butter and cheese imports. This means that tariffs will apply on EU butter and cheese coming in, but the UK tariff is significantly lower than the tariff the EU applies to third countries.
  • No TRQs for pork.
  • EU pork will face a duty entering the UK market.
  • No tariff protection for eggs, cereals or fruit and veg (except fresh beans);
  • Small TRQ for raw cane sugar for refining (260,000t). Out of quota duty remains at (€33.9/100kg);
  • Fertiliser UK tariff of 6.5%.

The announcement will also see a number of tariffs retained on finished vehicles in order to support the automotive sector. However, car makers relying on EU supply chains would not face additional tariffs on car parts imported from the EU to prevent disruption to supply chains.

Also Read: Brexit jargon: What is a Tariff Rate Quota and how does it work?

In addition, there are a number of sectors where tariffs help provide support for UK producers against unfair global trading practices – such as dumping and state subsidies. As a result, duties will be retained for these products, including certain ceramics, fertiliser and fuel.

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

If we leave without a deal, we will set the majority of our import tariffs to zero, whilst maintaining tariffs for the most sensitive industries.

“This balanced approach will help to support British jobs and avoid potential price increases that would hit the poorest households the hardest.

“It represents a modest liberalisation of tariffs and we will be monitoring the economy closely, as well as consulting with businesses, to decide what our tariffs should be after this transitional period.”

Irish border issue

The Government has also confirmed today that it will take a temporary approach to avoid new checks and controls on goods at the Northern Ireland land border if the UK leaves the EU without a deal.

The UK’s temporary import tariffs will therefore not apply to goods crossing from Ireland into Northern Ireland.

It has created concern that the region could be inundated with cheaper imports while its producers are subjected to tariffs.

Why market access can’t stay the same

If the UK maintained its current external tariff regime and applied it to the EU, this would impose new tariffs on EU imports, driving up prices for consumers and disrupting business supply chains.

If it maintained zero tariffs with the EU, it would also have to extend this to the rest of the world due to WTO rules.

This would minimise disruption to EU trade but would open the UK to competition from other countries, including those with unfair trading practices.