UK Markets closed

UK government publishes temporary tariff regime for no-deal Brexit

Lianna Brinded
·Head of Yahoo Finance UK
Photo: Reuters
Photo: Reuters

The UK government has published the temporary tariff regime for a no-deal Brexit.

The announcement comes just hours after members of parliament voted against prime minister Theresa May’s ‘new’ Brexit deal by 391 votes to 242 — a majority of 149 votes.

The UK government said in a statement that in the event of a no-deal Brexit — which means Britain crashing out of the EU without an agreement and therefore creating a vacuum of where there are no set rules and regulations for businesses to adhere to — the regime is intended to “minimise costs to business and consumers while protecting vulnerable industries.”

It also insisted that the regime is “temporary” and “the government would closely monitor the effects of these tariffs on the UK economy. It would apply for up to 12 months while a full consultation and review on a permanent approach to tariffs is undertaken.”

READ MORE: The winners and losers from the UK’s tariffs plans

“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,” said trade policy minister George Hollingbery in a statement.

What the temporary regime looks like

There are three key points to the temporary tariff regime in the event of a no-deal Brexit:

  1. UK businesses would not pay customs duties on the majority of goods when importing into the nation.

  2. Some 87% of total imports to the UK by value would be eligible for tariff free access.

  3. Tariffs would still apply to 13% of goods imported into the UK.

“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 spikes that would hit the poorest households the hardest,” said Hollingbery.

“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.”

The 13% of goods imported in the UK that would incur a tariff include “a mixture of tariffs and quotas on beef, lamb, pork, poultry and some dairy to support farmers and producers who have historically been protected through high EU tariffs.”

Carmakers will also be hit as the government said that it’ll retain “a number of tariffs on finished vehicles in order to support the automotive sector and in light of broader challenging market conditions.”

“However, carmakers relying on EU supply chains would not face additional tariffs on car parts imported from the EU to prevent disruption to supply chains,” it added.

When it comes to food, the UK would still retain a tariffs on goods from developing countries, such as bananas, raw cane sugar, and certain kinds of fish. The government said this was to “ensure access” to those markets is “maintained.”

Tariffs on certain ceramics, fertiliser, and fuel will also be retained.

This will be good news for some business leaders. The head of the British Ceramic Confederation previously said “any unilateral removal of UK tariffs on our imports, without any prospect of other countries reciprocating on our exports, would put British ceramic manufacturing at risk.” Laura Cohen added “it would give foreign competitors a boost, while putting our members’ home market at risk.”

Trade secretary Liam Fox had previously floated slashing all tariffs to zero in February. Meanwhile, a report by MPs from the influential public accounts committee on Tuesday said that the UK government’s preparations for a no-deal Brexit have been “rushed”, “risky,” and “over-optimistic.