'No Deal' Brexit Tariffs to be Slashed

UK trade

Above: Containers at Tilbury, Essex. Image © Ralf Gosch, Adobe Images

The UK government says it will eliminate import tariffs on a wide range of goods and avoid a 'hard' border between Ireland and Northern Ireland in the event of a 'no deal' Brexit.

According to the government, 87% of total imports into the UK will be free of tariffs, whereas at present only 80% of imports are currently free of tariffs.

The reduction on tariffs would apply for 12 months following the country's departure date under a 'no deal' scenario.

Notably, betting markets have raise the odds of tonight’s vote which favours a 'no deal' Brexit passing through parliament from 10% to 30%.

It appears that agriculture in particular will continue to be guarded by tariffs, an acknowledgment by the government that the country's rural sector would be at risk from a flood of agricultural imports were tariffs to be dropped.

But all goods crossing the border from Ireland into Northern Ireland would not be covered by the new import tariff regime in order to ensure no border checks are required, at least from the UK side of the border.

Further details show that some finished cars will continue to attract duties, in order to protect the UK's car manufacturing industry which has come under pressure of late.

However, components being imported from Europe would be exempt.

The tariff schedule appears to be calibrated to ensure there is as small an impact on UK trade as possible in the event of a no deal and will be welcomed by UK importers as it removes a degree of uncertainty concerning a 'no deal' outcome.

The UK is heavily dependent on the import of goods, with the country's trade deficit widening to £3.83BN in January 2019 from an upwardly revised £3.45BN in the previous month.

Placing tariffs on imports would likely raise the cost of goods, which would put pressure on UK consumers in the event of a 'no deal'.