What No Deal Brexit tariffs mean and how cost of imported Volkswagen cars, steak and cheese could rise – but it means cheaper wine
Usually there's no tax – known as a "tariff" to pay on goods being imported into the UK from the EU.
But if a trade deal with the EU isn't agreed, a tax on one in 10 European Union imports to the UK will be introduced.
And there's a fear that these higher taxes could be passed onto consumers in the form of higher prices.
The temporary tariff regime would last for the first 12 months after a no deal Brexit while the Government comes up with a permanent solution.
Which items could rise in price?
It's mostly food items that face the import tariffs because the Government says it wants to protect British farmers from the impact of a flood of cheap goods from around the world.
But Matthew Lesh, head of research at think tank the Adam Smith Institute, says it means shoppers will end up paying more – particularly for meat.
He said: “Brits are set to pay substantial import taxes on meat. We’ll be paying more for Spanish chorizo, New Zealand lamb and Danish pork.
"Tariffs are a tax on British consumers that make food more expensive."
Helen Dickinson, chief executive of the British Retail Consortium adds that the introduction of tariffs will "push up costs and reduce the choice on the shelves we currently enjoy".
The exact increases depend on the item and some tariffs only apply once a threshold on the amount imported has been reached.
What does the UK import from the EU?
In 2017, the EU accounted for 53 per cent of imports and 44 per cent of UK exports.
But the share of all UK imports from the EU has fallen from a high of 58 per cent in 2002.
These are the goods were imported in 2017:
- Cars were the UK’s single largest import from the EU in 2017, valued at £47billion and making up 18.1 per cent of all UK goods imports from the EU (and 83 per cent of all UK imports of road vehicles)
- Medicinal and pharmaceutical products – 7.9 per cent
- Electrical machinery and appliances – 4.4 per cent
- Miscellaneous manufactured articles – 4.1 per cent
- Telecomms & sound recording equipment – 3.8 per cent
- General industrial machinery – 3.8 per cent
- Power generating machinery – 3 per cent
- Office machines and automated data processing machines – 2.9 per cent
- Vegetables & fruit – 2.7 per cent
- Petroleum and petroleum products – 2.6 per cent
For example, nearly 28million beef carcasses can be imported into the UK from the EU in the first quarter of the year alone before the tariff applies.
A tax of 6.8 per cent plus 93.3 euros per 100 kilograms will then be charged.
As an example of how this may hit shoppers, take a tin of Princes Corned Beef, which is produced in France. This currently costs £2.50 at Tesco but it could rise by 22p to £2.72 if the full 8 per cent tariff on corned beef is passed on.
Meanwhile, Sainsbury's Albacore Tuna in Extra Virgin Olive Oil, which is produced in Spain, could rise by 84p from £3.50 to £4.34 if the full 24 per cent tariff on tuna is passed on.
And it's not just food; certain items of clothes may also be hit. For example, cotton pants made outside of the EU face a 12 per cent import levy.
This could see a £1.08 pack of three men's pants rise from £9 to £10.08.
Cars will also face a tariff jump of 10 per cent. This could affect a lot of people as 83 per cent of all cars imported to the UK are from the EU.
How will the trade tariffs affect businesses and consumers?
British industries have 'no time to prepare'
The trade tarrifs have been described as a "sledgehammer for our economy" by Carolyn Fairbairn, director-general of the Confederation of British Industries (CBI).
She told BBC Radio 4's Today programme that the country is facing "the biggest change in terms of trade since the mid-19th century with no consultation with business and no time to prepare".
Ms Fairbairn added: "What we potentially are going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner."
When it comes to the impact on small businsesses, Mike Cherry, national chairman of the Federation of Small Businesses (FSB) warns that tariff changes could see many UK firms "undercut by cut-price foreign imports".
Food prices may rise
A no deal Brexit, the introduction of tariffs, non-tariff barriers and the falling value of Sterling will see food prices rise.
Helen Dickinson, chief executive of the British Retail Consortium (BRC) said this will "push up costs and reduce the choice on the shelves we currently enjoy".
Medicine could run out
There aren't any changes in tariffs for the pharmacuetical industry but Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry (ABPI), says that despite preparing for a no deal Brexit, we could face the "very real possibility of disruption to the supply of some medicines".
Motor repair firms may be 'forced to close'
A no deal Brexit could cause a delay on vehicle parts being imported from the EU, according to Chris Weeks, director of the National Body Repair Association (NBRA) – an industry which has around 35,000 employees.
He adds that this "could see countless repairers running out of cash and being forced to close their businesses in a matter of weeks".
Take a new Volkswagen Polo S – this German car currently costs £14,330 but a 10 per cent tax could see prices rise by £1,433 to £15,763.
The Volkswagen Group has confirmed that it's told retailers to pass on any tariff rises to customers of Volkswagen, Seat and Skoda.
But Audi, which is also part of the group, says prices aren't affected for now.
What products could see price cuts?
But the good news for shoppers is that the cost of some items imported from outside of the EU will fall.
Batteries, spoons and carpets are among such items. The tariffs on these currently range from 4.7 per cent to 8.5 per cent and will be slashed to 0 per cent.
Meanwhile, the tax on televisions will fall from from 14 per cent to 0 per cent. This means a 43-inch Toshiba TV that's manufactured in Japan could fall in price by £42 from £299 to £257.
The Sun has asked Currys PC World if it will indeed pass on price reductions and we'll update this story if we get a response.
There are also foods that will see tariffs cut. For example, oranges will have their tariff cut from 16 per cent to 0 per cent.
This means Jaffa Oranges, some of which are produced in Israel and South Africa, could fall in price by 29p from £1.85 to £1.56 at Tesco.
While onions, some of which Tesco imports from Egypt and New Zealand, could fall by 2p to 16p per kilogram down from 18p per kilo as the 9.6 per cent tariff on these is being cut.
The import tariff on wine and vodka will also fall from 20 per cent to 0 per cent.
So Tesco's South African Chenin Blanc white wine could fall by 85p from £4.25 to £3.40.
All of these products listed will continue to have a 0 per cent tariff when imported from the EU.
But while Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA) welcomes the tariff suspension on booze he warns that more needs to be done to ensure free trade.
He said: "We welcome the decision that there would be a temporary suspension of tariffs on wine and most spirits under ‘No Deal’, which the WSTA called for earlier this year.
"But far more than this would be required to ensure that wine and spirit businesses can deliver a free flow of trade."
Commenting on the tariff changes, a Government spokesperson said: “Our transitional tariff regime will help to protect British jobs and avoid consumer price increases if we leave the European Union without an agreement.
“This is a temporary measure and we will be monitoring the economy closely, as well as consulting with businesses to decide what our tariffs should be after this transition period.”
The Sun has contacted Asda, Morrisons, Sainsbury's and Tesco to ask if they'll pass on tariff increases and cuts and we'll update this story as soon as we get a response.
Theresa May’s Brexit deal was last night crushed by MPs meaning we’re no nearer to quitting EU after 993 days.
But MPs MUST keep No Deal on the table – or Remainers will be on the road to stopping Brexit.
Meanwhile, Philip Hammond has warned MPs in today's Spring Statement that a £20billion spending windfall will be wasted if there’s a no deal Brexit.
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