What does the reported tariff slash on imported goods mean for business?

Today media reported that the Department for International Trade intends to cut 80-90% of all tariffs imposed on goods imported into Britain, according to Whitehall sources. This news has come as a surprise to many given the UK’s current position at the negotiating table…

In the summer of 2018, the UK submitted a proposed tariff schedule to the World Trade Organisation (WTO) which will set out the maximum duty rates the UK can impose on products.  The submission to the WTO was considered confidential, so we don’t know the exact details of what was proposed. While Government was due to publish the UK tariff that would be applied in the event of a hard Brexit, this announcement has been pushed back a number of times. It’s fair to assume, however, that the tariff will likely have been higher than what has been reported today.

While the UK would be free to drop the agreed rate, today’s news seems a little unusual against the current backdrop; why spend time and effort negotiating these only to cut them to zero at this stage?  It wouldn’t come as a surprise if these proposals were temporary to allow the Government to assess the impact on businesses.  However, we do have to acknowledge that we are in “unchartered waters” and stranger things have happened in recent times.

Our thoughts

From our wide-spanning network of industry representatives, we know that the Government has been debating which approach to take – whether to slash tariff rates, undertake a general review or continue with the current EU rates.

This is a very politically charged topic and, as such, has been met with a mixed response.

On the surface, it seeks to protect UK consumers as it may help to mitigate the predicted hike in retail prices.  On the flip side, it threatens businesses impacted by tariffs on products that are manufactured here in the UK.  Slashing tariffs on these items could add to the pressures already impacting a struggling UK manufacturing base. This could make business unsustainable, lead to job losses or in the worst case lead to business closures.

It could also lead to complications when / if the UK needs to negotiate free trade agreements with other nations.  If the UK is already on low (or zero!) import tariffs, it will be harder to negotiate better deals for UK exporters.

Today’s news reinforces the ever-increasing need to understand and control your supply chain and import footprint.  At Customs Connect Digital Solutions, we have developed ground-breaking technology to help you manage the impact of trade tariffs on your business. A real-time connected dashboard of the data spanning your supply chain will support you to make better business decisions and to plan and prepare with confidence – whatever tariffs Government agrees. To find out more or arrange a free demo of the software, please contact support@ccdigitalsolutions.co.uk

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