U.K. Announces Plan for Sweeping Tariff Cuts After Brexit

The U.K. set out its post-Brexit tariffs plan, cutting import duties on many products while protecting industries such as automotive and agriculture in global trade beyond Europe.

Items like dishwashers, freezers and Christmas trees will be able to enter the U.K. tariff-free as of Jan. 1 2021, the Department for International Trade said in a statement Tuesday. Under the plan, 30 billion pounds worth ($36.6 billion) of tariffs will also be removed on supply chain imports, like copper alloy tubes, and screws and bolts, the department said.

Britain’s so-called “global tariff” regime is a key part of its economic policy as it leaves the European Union, because it replaces the EU’s common external tariff, which sets duties on non-EU trade not otherwise covered by a preferential agreement. The U.K. said 60% of its trade will come in tariff-free under its plan, compared to 47% currently.

“Our new global tariff will benefit U.K. consumers and households by cutting red tape and reducing the cost of thousands of everyday products,” International Trade Secretary Liz Truss said in the statement. “We are backing U.K. industry and helping businesses overcome the unprecedented economic challenges posed by coronavirus.”

However, the U.K. said it would maintain a 10% tariff on cars, and also keep duties on agricultural products like beef, lamb and poultry, to protect those industries. The government also said it was cutting duties on renewable energy items like thermostats, vacuum flasks and LED lights, to promote a green economy.

Separately, the U.K. is engaged in trade talks with the EU, aiming to sign a Canada-style accord that would eliminate most tariffs and quotas on goods but introduce new barriers like customs paperwork. The latest round of talks ended with little progress last week.

The U.K.’s announcement will help its ongoing trade negotiations with the EU, the U.S and Japan because it makes clear what the default duties would be if no agreement is reached in these talks, said Sam Lowe, senior research fellow at the Centre for European Reform.

Britain’s plan also marks a walk-back from the temporary tariff schedule it proposed in the event of a no-deal Brexit last year, which would have seen 87% of U.K. imports made tariff-free. That proposal was criticized for giving away too much British leverage in future trade talks.

“It seems to me that those in government who wanted to retain tariffs for the purpose of future trade negotiations won the argument this time round,” Lowe said.