Business warns of ‘sledgehammer’ to economy from no-deal Brexit tariff plans
Business, unions and farmers have responded with dismay to Government plans for changes to tariffs on imported goods if the UK leaves the EU without a Brexit deal.
The CBI said the new rates would hit the UK economy like a “sledgehammer”, while unions warned that zero tariffs on steel would “destroy” jobs.
Large reductions in levies on food from outside the EU were “worrying” to UK producers and could lead to “a greater reliance on food produced overseas”, said the National Farmers Union.
There was widespread anger that details of the proposed unilateral regime were released just 16 days before the scheduled date of Brexit on March 29, with some business groups complaining they had not been consulted.
Under the Government’s plans, tariffs will be slapped for the first time on a range of EU imports, including cars and food products like beef, chicken, lamb, pork, butter and “Cheddar-like” cheese.
A 10.6% levy on “finished vehicles” could add £1,500 to the cost of a typical family hatchback. But car parts are zero-rated to avoid disruption to supply chains.
Tariffs will be slashed or eliminated on a wide range of imports from outside the EU, potentially lowering prices on goods from countries like the US and China.
Ministers said that overall the changes would represent a “modest liberalisation” of the UK’s tariff regime, and would remain in place for up to 12 months after a no-deal Brexit.
Some 87% of imports to the UK by value would be eligible for zero-tariff access – up from 80% at present – while many other goods will be subject to a lower rate than under EU rules.
International Trade Secretary Liam Fox said: “The temporary tariff would take a balanced approach to support the UK economy as a whole.
“It would maintain open trade on the majority of UK imports, to support consumers and business supply chains, but retain necessary tariff protection for particular sectors of the UK economy.”
But the EU said it would impose the same levies on UK goods as on imports from other countries with which it has no trade deal, making British producers less competitive on European markets.
CBI director-general Carolyn Fairbairn told BBC Radio 4’s Today programme: “What we are hearing is the biggest change in terms of trade this country has faced since the mid-19th century being imposed on this country with no consultation with business, no time to prepare.
“This is no way to run a country.
“What we potentially are going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner.
“This is a sledgehammer for our economy.”
The Federation of Small Businesses’ national chairman Mike Cherry accused ministers of “leaving businesses in the lurch”.
The sudden reduction or elimination of import tariffs would mean UK producers being “undercut in a heartbeat by artificially cheap foreign imports” at a time when exporters will face new obstacles to selling into European markets, he said.
TUC general secretary Frances O’Grady said the Government was showing “reckless disregard for people’s jobs”, warning the new regime would deal “a hammer blow to our manufacturing industries and the communities they support”.
The general secretary of steelworkers’ union Community, Roy Rickhuss, said zero tariffs on imports would be “a fresh betrayal of British steelworkers, putting further pressure on their jobs at a difficult time for the industry”.
In special arrangements for Northern Ireland, no tariffs will be payable on EU goods crossing the land border from the Republic unless they are exported on to the British mainland.
But ministers said there would be no border checks down the Irish Sea, with customs officers using compliance and intelligence methods to spot abuses.
The decision – designed to avoid the need for checkpoints which might revive sectarian tensions – was branded a “smugglers’ charter” by the chairman of the Commons International Trade Committee, Angus MacNeil.
NFU president Minette Batters described the timing of the announcement a fortnight before the new rates may come into effect as “appalling”.
The Government’s approach would not necessarily lead to cheaper food, but would mean the UK loses control of animal welfare standards, she warned.
Shadow international trade secretary Barry Gardiner said: “UK companies will now face competition from a flood of cheap imports that undercut them, putting thousands of jobs here at risk.”
Mr MacNeil said the changes were likely to lead to “significant increases” in prices for UK shoppers and challenging conditions for business, while reducing UK leverage in future trade talks.
“The Government says the planned arrangements are only intended to last for up to 12 months in the first instance,” said the SNP MP.
“But a year is plenty of time for irreversible damage to be done to individual businesses and even whole sectors. And the Government’s complete lack of clarity about what happens after 12 months just adds to the already crippling uncertainty which British businesses face.”