9 in 10 imports will have no tax in No Deal Brexit – but Theresa May whacks German cars and French food
The PM announced the tariffs which Britain would charge in the event of a No Deal Brexit
NINE out of ten imports will enter Britain tax-free if we quit the EU without a deal, Theresa May announced today.
But the PM threatened to hit key EU goods such as cars and food with large tariffs in a warning shot to European leaders.
French farmers and German carmakers will face hefty charges when selling their goods in to Britain.
Ministers also promised not to impose any controls at all on goods crossing the Irish border to avoid the need for checks.
The tax changes are designed to protect British producers by making UK goods cheaper than European imports - while also cutting the costs faced by non-EU countries when they sell products here.
The full range of tariffs Britain would levy under No Deal was announced this morning ahead of another crunch Commons vote.
They include:
- Large charges on beef, lamb, pork and poultry and dairy prducts
- Tariffs on finished cars and other vehicles, but not on parts for factories
- Taxes on fuel and ceramics - to stop a flood of subsidised goods from abroad
- Continued tariffs on goods such as bananas which mostly come from poorer countries
The same taxes would apply to goods coming from anywhere in the world - eliminating the advantages currently faced by European countries when they sell to the UK.
Overall 87 per cent of imports would face no tariffs, up from 80 per cent currently.
The temporary tariff regime would last for the first 12 months after a No Deal Brexit, before the Government imposes a permanent solution.
Most food products would face import taxes in order to protect British farmers from the impact of a flood of cheap goods from around the world - for example, beef imports would have a charge of at least 6.8 per cent slapped on them.
And all cars would be hit with a 10.6 per cent tariff.
There would be no charges on car parts coming in to Britain as part of the manufacturing supply chain - which could encourage European firms to set up factories here so they can sell to UK consumers tax-free.
THREAT TO EU
Mrs May will hope that the threat of slapping new taxes on goods from Germany, France and other European countries might push the EU to offer fresh tweaks to the Brexit deal after it was rejected last night.
Under the proposed scenario, British goods such as cheese, wine and cars would become comparatively cheaper than their European equivalents.
Under World Trade Organisation rules, Britain can't give the EU better terms than other trading partners without a comprehensive trade deal in place.
But we are allowed to make an exception for Ireland because of the need to keep the border with Northern Ireland open and avoid checkpoints which could become a target for terrorists.
However, the EU could still impose its own checks at the Irish border in order to protect the European customs union from competition coming from the UK.
Brussels has insisted the only way to keep the border open permanently is through an arrangement similar to the hated backstop plan which has twice doomed Mrs May's deal to defeat in the Commons.
The plans would see 18 per cent of European goods face tariffs - up from zero under EU rules.
For imports from outside the EU, just 8 per cent would be taxed - compared to nearly half currently.
Trade Minister George Hollingbery said this morning: "Our priority is securing a deal with the EU 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 spikes that would hit the poorest households the hardest."
What does the UK import from the EU?
THE EU is the UK's largest trading partner, according to a January 2019 House of Commons briefing paper.
In 2017, the EU accounted for 53 per cent of imports and 44 per cent of UK exports.
But the share of all UK imports from the EU has fallen from a high of 58 per cent in 2002.
These are the goods were imported in 2017:
- Cars were the UK’s single largest import from the EU in 2017, valued at £47billion and making up 18.1 per cent of all UK goods imports from the EU (and 83 per cent of all UK imports of road vehicles)
- Medicinal and pharmaceutical products - 7.9 per cent
- Electrical machinery and appliances - 4.4 per cent
- Miscellaneous manufactured articles - 4.1 per cent
- Telecomms & sound recording equipment - 3.8 per cent
- General industrial machinery - 3.8 per cent
- Power generating machinery - 3 per cent
- Office machines and automated data processing machines - 2.9 per cent
- Vegetables & fruit - 2.7 per cent
- Petroleum and petroleum products - 2.6 per cent
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But the CBI’s Carolyn Fairbairn blasted: “This is a sledgehammer for our economy.”
In the wake of last night's humiliating defeat for the Government, the Commons will today vote on whether Britain should leave the EU without a deal on March 29.
If they opt against a No Deal scenario, then tomorrow they will have the chance to delay Brexit by two months.
How will the trade tariffs affect businesses and consumers?
HERE'S how today's news on EU imports may affect industries and consumers:
British industries have 'no time to prepare'
The trade tarrifs have been described as a "sledgehammer for our economy" by Carolyn Fairbairn, director-general of the Confederation of British Industries (CBI).
She told BBC Radio 4's Today programme that the country is facing "the biggest change in terms of trade since the mid-19th century with no consultation with business and no time to prepare".
Ms Fairbairn added: "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."
When it comes to the impact on small businsesses, Mike Cherry, national chairman of the Federation of Small Businesses (FSB) warns that tariff changes could see many UK firms "undercut by cut-price foreign imports".
Food prices may rise
A no deal Brexit, the introduction of tariffs, non-tariff barriers and the falling value of Sterling will see food prices rise.
Helen Dickinson, chief executive of the British Retail Consortium (BRC) said this will "push up costs and reduce the choice on the shelves we currently enjoy".
NFU president, Minette Batters, adds that farmers and food businesses have "no time to prepare for the implications". She says this the tariffs and a no deal Brexit could also lead to a "greater reliance" on food produced overseas.
Medicine could run out
There aren't any changes in tariffs for the pharmacuetical industry but Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry (ABPI), says that despite preparing for a no deal Brexit, we could face the "very real possibility of disruption to the supply of some medicines".
Motor repair firms may be 'forced to close'
A no deal Brexit could cause a delay on vehicle parts being imported from the EU, according to Chris Weeks, director of the National Body Repair Association (NBRA) - an industry which has around 35,000 employees.
He adds that this "could see countless repairers running out of cash and being forced to close their businesses in a matter of weeks".
But Edmund King, AA president, adds that as car parts from the EU would be tariff free, this will help its members and car plants in the UK.
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