A worker at a Volkswagen factory. Tariffs on imported cars are designed to protect the UK car industry, but could lead to the price of an imported vehicles rising by several thousand pounds
Tariffs on imported cars are designed to protect the UK car industry, but could lead to the price of imported vehicles rising by several thousand pounds © REUTERS

The price of food and cars imported to the UK from Europe will rise sharply under a new tariff regime set out by Boris Johnson’s government on Tuesday if the EU and Britain fail to reach a deal on their post-Brexit relationship.

The plans, announced by trade secretary Liz Truss, would lower some tariffs on imports compared with the levels Britain has applied as part of the EU’s customs union, with products including dishwashers and tampons set to have new zero rates.

But the UK approach also includes 10 per cent duties on cars, and levies on beef and poultry as well as protections for the ceramics industry.

The new system of tariffs will apply from January 2021 — when Britain’s post-Brexit transition period agreed with the EU expires — to imports from any countries with which it does not have a preferential trade deal, an agreement which grants special market access to specific nations.

It would also apply to trade with the EU if Mr Johnson fails to clinch a deal with Brussels on Britain’s future relationship with the bloc. Talks between the UK and the EU hit an impasse last week.

Britain will reduce tariffs on numerous products compared with those it has applied as part of the EU’s customs union, which binds its member countries together by making sure they all apply the same import duties to goods from outside the EU.

The new system, called the UK global tariff, will be a “simpler, easier to use and lower tariff regime than the EU’s common external tariff,” the UK government said.

Last March, the Department for International Trade set out draft proposals that would have eliminated tariffs on 87 per cent of products as the UK prepared for the possibility of a no-deal Brexit.

Now, by contrast, it says that it is aiming for an initial 60 per cent of imports into the UK to be tariff-free under the new rules — compared with 47 per cent at present — and that the figure should rise as more trade deals are struck.

Sam Lowe, a trade expert, said ministers wanted to keep the flexibility to cut the tariffs in future. “It seems those in government who wanted to retain tariffs for the purpose of future trade negotiations won the argument this time around,” he said.

The DIT said it would scrap levies on some £30bn worth of goods that are part of UK supply chains. Examples it gave included tariffs on copper alloy tubes that would drop to zero compared with 5.2 per cent at present, while tariffs on screws and bolts would drop from 3.7 per cent to zero.

In a move likely to be welcomed by environmental campaigners, tariffs on vacuum flasks, bike inner tubes and LED lights will also be slashed to zero.

But key UK strategic sectors will be protected. The 10 per cent tariffs on imported cars are designed to protect the UK car industry, but could lead to the price of an imported vehicle jumping by several thousand pounds.

The agricultural tariffs are supposed to protect British farmers who are worried about a flood of cheap imports from overseas. Last week the Financial Times reported that UK cabinet ministers were in dispute over US demands for farm tariffs to be reduced to smooth the path to a US-UK trade deal.

Helen Dickinson, chief executive of the British Retail Consortium, warned that families would pay more for food.

“UK consumers have become accustomed to a huge variety of affordable food thanks, in part, to tariff-free imports from the EU,” she said. “Unless a similar agreement is reached in the next seven months, imported agricultural products will be subject to new tariffs, raising costs for consumers.”

Nicholas Macpherson, former permanent secretary at the Treasury, said the economic case for Brexit had rested on free trade and cheap food. “Not for the first or last time, the Chamberlainite protectionists within the Tory party have defeated the Gladstonian liberals.”

Ms Truss said Britain would be able to set its own tariff regime, “tailored to the UK economy”, for the first time in 50 years. “Our new global tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products,” she said.

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