Yahoo Finance Who are the winners and losers from UK tariff plans for a no-deal Brexit?
British businesses and consumers are likely to face unprecedented levels of disruption if the UK leaves the European Union without a deal on 29 March.
The government left it until today to announce the radically different tariff and quota regime it would introduce in a no-deal scenario, as the UK would no longer automatically share the EU’s rules and taxes on imports and exports.
The government says the huge shakeup would be “temporary” while it planned its longer-term strategy, but it could last for up to 12 months.
The changes could have an enormous impact on British businesses and consumers, paving the way for more or less global competition for UK firms depending on the sector.
READ MORE: What you need to know about the temporary tariff regime
As Adam Marshall, director general of the British Chambers of Commerce (BCC), has pointed out, there could be “winners and losers across UK industry overnight” from the new regime. He also condemned the lack of consultation, preparation and support for affected firms.
Many of the details and likely effects of such major changes are still not clear, but here are some of the potential winners and losers from the new regime:
Winner – British beef, lamb, pork and poultry farmers
New tariffs would not only protect domestic farmers and producers in these sectors from worldwide competition as now, but also give them new protection against EU competition that is currently traded freely.
The government said only that “some” dairy goods would face tariffs and quotas, however, and there was no mention of many other food imports.
The decisions reflects the sector’s history as one long protected by the EU and its individual member states. But UK food producers may also be hit by harsher tariffs from some other countries when exporting abroad, so export-focused firms will not all welcome the new regime.
Loser – many British producers including steel and bicycles
David Henig, director of the UK trade policy project, warns in a blogpost that British producers who export abroad could face increased barriers as other countries respond to British tariffs with similar measures. He says this could “significantly affect competitiveness.”
Increased tariff-free imports could also prove catastrophic for some through new global competition at home, forcing them to improve efficiency at best and struggle to survive at worst.
The UK’s iconic steel industry, already struggling against foreign competition, will be dismayed to see tariffs removed on steel, threatening UK production.
British bike makers in particular could face huge threats from overseas competitors, with tariffs and anti-dumping duties removed. They will also face tariffs to export abroad. “Bikes could well be cheaper, but the future of UK manufacturing is again uncertain,” says Henig.
Winner – some ceramics, fertiliser and fuel firms
Several sectors already protected against controversial global trading practices like dumping and state subsidy will continue to receive support through tariffs.
Tariffs would be kept to block such competition in the production of certain ceramics, fertiliser and fuels.
Winner – some global firms exporting to the UK
More firms outside the EU would find it easier to export to the UK overall, as some would face lower tariffs than under the present European rules.
The government estimates that 87% of total imports to the UK by value would be eligible for tariff-free access, up from 80% at present.
Ministers have therefore called the changes a “modest liberalisation” of the tariff regime, though British firms under increased competition may not see it that way.
Loser – many EU producers
The likely increase in tariff-free imports from across the world could mean European producers also facing greater competition for the UK market.
Henig predicts: “This will probably mean EU producers lose out to Chinese and other lower cost producers particularly in industrial products.”
Winner – some developing countries trading with Britain
The government has said it will keep giving preferential access to developing countries “to meet out long-standing commitment to reduce poverty through trade.”
It means keeping current barriers to producers outside developing countries for goods including bananas, raw cane sugar and certain types of fish.
Loser – Irish exporters to the UK
Angus Woods of the Irish Farmers’ Association told RTÉ the Irish family farm model of agriculture would not survive the imposition of tariffs by the UK for the first time in over 200 years.
Producers could face tariffs on goods sold to the rest of the UK via Northern Ireland. Ireland’s agriculture minister said it was “potentially a disaster” to a key Irish export sector, with beef feared particularly at risk.
But the tariff regime at least contains a decision on trade across the border with Northern Ireland that many will welcome. Special arrangements mean that new UK import tariffs on EU goods will not apply to Irish products exported to Northern Ireland only.
Winner and loser – British car industry
Less integration with Europe may pose huge challenges to the car industry in future, and the effects of Brexit are already being felt as carmakers decide to shift more production elsewhere.
Henig says British carmakers are likely to face increased tariffs from many key countries they export to, meaning the sector would “soon become uncompetitive.”
That is the flip side of tariffs on finished vehicles entering the UK, intended to protect their domestic market from foreign rivals. The tariffs will also not apply to car parts imported from within Europe, helping to at least alleviate the level of disruption to the sector’s highly integrated supply chains.
Winner and loser – UK consumers
UK consumers as a whole are likely to face positive and negative changes to prices from the new tariffs, depending on the products, as well as how other countries respond.
Henig says there will be “probably little effect on consumer prices overall,” but a downward trend where tariffs are reduced as some British firms are undercut by foreign ones.
He says large numbers of current tariffs would be removed on products including bicycles, cereals and shoes, increasing access to certain more affordable or alternative products from around the world. But he expects car prices to rise because of protections offered to carmakers.
Crucially, any gains from more liberal tariffs may be wiped out entirely if the value of sterling plummets after Brexit, particularly in a chaotic and last-minute no-deal outcome.
