Today the Government announced the temporary tariffs the UK will impose in the event of a no-deal Brexit.

These are the tariff schedules UK importers would face if the UK leaves the EU without a deal. These would apply equally to all other trading partners, except for those where the UK has a free trade agreement in place and around 70 developing countries that will benefit from preferential access to the UK market.

What is changing?

Without getting too technical, the UK government has used the EUs common external tariff schedules as a base and looked to reduce tariffs where they can. They have not looked to increase tariffs in any sectors.

This means that some tariffs will be reduced to zero, eg:

  • Chemicals – down from highs of 6% to zero.
  • Plastics – down from highs of 6.5% to zero.

Others will see little change, eg finished vehicles in the automotive sector.

What does all this mean?

An end to UK-EU tariff free trade – except for Northern Ireland

Only 82% of imports from the EU would be tariff-free, down from 100% now.

Leaving the EU with no deal would mean that all goods imported into the UK would be liable for customs duties.

This means organisations who import only from the EU will potentially have to pay duties for the first time – for example: the tariff on cars may remain unchanged at 10%. However, a company importing cars from Germany would never have paid this due to the UK’s membership of the Customs Union. In the event of No Deal this will change.

The government has also confirmed today that it will take a temporary approach to avoid new checks and controls on goods at the Northern Ireland land border if the UK leaves the EU without a deal. The UK’s temporary import tariffs will therefore not apply to goods crossing from Ireland into Northern Ireland.

Reduced tariffs on imports from around the world

92% percent of imports from the rest of the world would pay no border duty, up from 56%.

While some organisations will lose access to EU originated Free Trade Agreements, the UK government has attempted to remedy this by reducing tariffs in many areas.

Less protection for UK industries

Reducing or removing tariffs however could expose UK manufacturers to increased competition from low-cost manufacturing countries. With little in the way of protection apart from any existing transitioned EU anti-dumping duty rates for the 12 months, there may be increased competition for automotive component manufactures and those in the steel industry.

What should businesses do?

Ensure they have the correct classifications

One thing any business can and should do now is check their tariff classifications - make sure goods and components are correctly classified to avoid unnecessary duties. Whist ensuring the correct customs valuation, and origin details are declared. So that once the future trade landscape is established, the pillars of customs compliance are already being adhered to.

Examine individual codes

The devil is in detail. Headline average tariff rates don’t help individual businesses.

Organisations need to go through the temporary rates in detail to examine the potential financial impact of any changes in tariffs relating to their specific commodity codes. This should also include assessing whether any changes to quotas have occurred and whether there are preferential rates for some countries and any reliefs available.

Mitigate where possible

If the tariff impact is significant, consider mitigating actions including:

  • transit relief (for products form EU to UK and then shipped back to EU)
  • bonded warehouse - to avoid double taxation on goods bound for the EU
  • processing relief (for any manufacturing in UK using EU components)
  • establishing an EU distribution centre
  • review sourcing options (UK supply instead of EU for UK market?)

Don’t forget FX

Some of the tariffs are priced in Euros meaning any fluctuations in currency will impact on the duty owed.

Our customs team are on hand to discuss these potential changes and actions you can take.