UK firms have reacted angrily to plans for sweeping changes to tariffs in the event of a no-deal Brexit, with business leaders slamming the government’s approach as “cack-handed”.
Bodies representing a wide range of UK business sectors accused policymakers of rushing out plans for major changes in trade terms without consulting companies, leaving them with no time to prepare.
Under the plans, tariffs will be cut to zero on 87% of goods imports as a temporary response if the UK leaves the EU without a deal.
The changes were announced as the government attempts to mitigate an anticipated £9bn food-price shock from a no-deal Brexit. However, the prices of some imported goods will rise, including meat, shoes and some cars.
Allie Renison, head of Europe and trade at the Institute of Directors, said that while cutting tariffs unilaterally was a necessary and welcome part of a country’s trade policy, the government had failed to do it in an open and consultative way.
“The belated, cack-handed way in which the government has handled its no-deal planning is one of the main reasons why many businesses will not be prepared for this outcome by 29 March,” Renison said.
“Politicians should be under no illusion: this package of mitigating measures do not help make the case for no deal. They are rather a reminder of the spike in invidious choices we would face as a country amidst a backdrop of chaos.”
Tariffs are border taxes charged on foreign imports. Importers pay them upon entry to the customs agency of the country or bloc imposing them.
Tariffs can be levied in different ways. It can be a flat-rate tariff linked to weight, or calculated as a proportion of the overall value of the goods. It can also be a mixture of both. A country can set a quota, enabling a certain volume of a product to flow in before a higher tariff rate kicks in.
Tariffs raise money for governments, but are primarily used to raise the price of foreign goods, protecting domestic producers from global competition.
Countries signed up to the World Trade Organization (WTO) must impose tariffs at the same level for all other WTO-member trading partners under the organisation’s “most favoured nation” rule – unless they secure alternative deals with particular countries or trading blocs.
Carolyn Fairbairn, director general of the Confederation of British Industry (CBI) lobby group, described the announcement as a “sledgehammer for our economy”.
“This tells us everything that is wrong with a no-deal scenario. 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,” she said.
“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.”
Along with other groups, the CBI said there would be winners and losers from the tariff changes, calling it a question of fairness.
Helen Dickinson, chief executive of the British Retail Consortium, said she was particularly concerned about tariffs on certain clothes and textiles – a good proportion of which consumers are currently getting tariff-free from countries such as Italy and Turkey.
She added: “However, it is the non-tariff barriers which will have the greatest impact on consumers. Tariffs, checks and increased documentation requirements will all result in delays, higher prices and reduced choice for consumers.”
The Wine and Spirit Trade Association echoed this comment, while welcoming the temporary suspension of tariffs on wine and most spirits.
The consumer group Which? said it would monitor the effect of the tariff changes if they came into force and stand up for consumers. Anabel Hoult, its chief executive, said: “It’s important that people have the choice of high-quality British products as well as competitively priced goods from abroad.”
The National Farmers Union said it was pleased that many agricultural sectors would be treated sensitively, but added: “It is enormously worrying that some sectors will not have this protection – noticeably eggs, cereals, fruit and vegetables”.
Unite, Britain’s biggest trade union, and the Society of Motor Manufacturers and Traders, the main body representing the car industry, called on the government to take no deal off the table immediately.
Steve Turner, Unite’s assistant general secretary for manufacturing, said: “Reducing tariffs to zero on the majority of imports, including steel, in the event of a no-deal Brexit would destroy jobs and leave UK manufacturers competing with both hands tied behind their backs.”
Business groups and most major companies have been outspoken in their campaign against leaving the EU without a deal, which they argue would harm exports and cause chaos at UK ports, disrupting vital imports.
David Potts, chief executive of the supermarket chain Morrisons, said that as two-thirds of its food came from the UK – including all beef and poultry – it would not be affected by many of the tariffs.
“It falls to retailers to continue in a very competitive framework by which British consumers get great value,” he said.
