Government must listen to business on tariffs

Commenting on reports that the Cabinet is considering options around making imports tariff-free across the board if we leave the EU next month without a deal, Adam Marshall, director general of British Chambers of Commerce (BCC), said: “Businesses across the UK will be deeply concerned by reports that ministers are considering setting UK import tariffs to zero in the case of no-deal.

“Ministers have not consulted with business on removing tariffs. They have shown no clear understanding of the damage that such a move could cause to key parts of the economy, including manufacturing and agricultural firms across the UK. They have no plan to support the industries, places and people who would be affected overnight by these proposed changes, and no time left to prepare.

“A snap decision to move to zero tariffs speedily and unilaterally would harm domestic producers and exporters, and create a huge new source of extra uncertainty for business communities at an already difficult time. Some UK businesses would lose market share very quickly, and find themselves facing imminent threats to their survival.

“In addition to the real-life impacts of such a move, businesses will also be anxious at the thought of the UK government ceding one of its levers for trade negotiations with other countries, before it even gets started.

“Decisions of this scale and consequence should only be taken after deep engagement with those most likely to be affected, and must take into account the potential long-term impacts on both trade and inward investment. None of this has happened.”

Suren Thiru, head of economics and business finance at the BCC, added: “While eliminating some de minimis tariffs may not impact on the competitiveness of some businesses, others would risk being decimated overnight. It makes it hard to see how the UK can build up tariffs from a zero base when there would be little incentive for other countries to negotiate.

“If the aim is to keep prices down for consumers should the UK leave without a deal, then analysis has shown that unilaterally reducing tariffs to zero would have little impact. Instead you risk losing businesses, and therefore jobs, in some sectors across the country, as firms find themselves priced out of being competitive overnight. In short, nobody wins.”

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