Lorries stand in line whilst waiting to board a ferry at the Port of Dover Ltd. in Dover, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

U.K. Unveils Tariffs for a No-Deal Brexit Ahead of Key Vote

(Bloomberg) --

The U.K. will avoid imposing tariffs on most imported goods in the event of a no-deal Brexit, though officials said prices of key European Union products including beef, cheese and cars will rise.

The government said Wednesday its “balanced approach” aims to offset a spike in prices that consumers would experience in a no-deal departure as a result of the falling pound and higher costs of imports. But a major U.K. business lobby described it as a “sledgehammer” for the economy.

The announcement comes after Parliament overwhelmingly rejected Prime Minister Theresa May’s Brexit deal for a second time Tuesday night, and lawmakers are expected to vote Wednesday to rule out leaving the EU without a deal -- a scenario the premier herself accepted would cause “damage” to the U.K. Revealing the government’s no-deal planning so close to the vote will be seen by many MPs as a strategy to focus minds.

“This is no way to run a country,” Carolyn Fairbairn, director general of the Confederation of British Industry, told the BBC. “What we are potentially 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. This is a sledgehammer for our economy.”

The government also said any tariffs won’t apply to goods imported into Northern Ireland from Ireland. There will be a “temporary, unilateral approach” that wouldn’t require checks at the Irish land border.

According to the Temporary Tariff Regime, 87 percent of goods by value will be eligible for tariff-free access, compared with 80 percent currently. The remainder, including some meat and dairy, as well as finished cars, will be subject to tariffs to protect domestic industry. The list doesn’t include car parts imported from the European Union.

Click here to read the government statement.

The U.K. will also retain existing tariffs in areas including fuel and ceramics as a protection against “unfair global trading practices,” such as dumping.

The rates proposed by the U.K. would be lower than currently set by the EU in many areas, ranging from 60 percent of the EU’s most-favored nation rate for poultry meat to 13 percent of the rate for cheese and pig meat.

On finished cars and trucks, the U.K. would apply a 10.6 percent tariff, compared to the 11.3 percent the EU charges most-favored nations.

On textiles, the U.K. would apply 0.9 percent, compared to the EU’s 8 percent. And footwear, on which the EU applies an 8.2 percent tariff, would be tariff-free into the U.K.

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