The Government has announced the UK’s new MFN tariff regime, the UK Global Tariff (UKGT)

Changes

UKGT is broadly in line with EU tariff schedule, though it introduces a number of changes, including:

– removing tariffs on products which are used in UK production, not made in the UK or are a nuisance tariff of below 2%;

– rounding tariffs down (to the nearest 2% below 20%, 5% between 20-50%, and 10% for tariffs over 50%) and moving complex agricultural tariffs to a single percentage; and

– removing the EU’s Meursing table of tariffs to allow the scrapping of thousands of tariff variations on products.

– UKGT also removes tariffs on £30 billion worth of imports entering UK supply chains.

Continuity

The UKGT also provides a level of continuity and protection, maintaining tariffs to a number of UK sectors and industries, including:

– tariffs on agricultural products such as lamb, beef, and poultry to be maintained;

– 10% tariff on cars to be maintained;

– tariffs for the vast majority of ceramic products to be maintained; and

– maintaining some tariffs which support imports from the world’s poorest countries who have preferential access to the UK market.

Coronavirus

– Almost all pharmaceuticals and most medical devices (including ventilators) are tariff free in the UKGT.

– While some products used to fight Coronavirus maintain a tariff, the UK has introduced a temporary zero tariff rate on these products. This relief waives the tariff and VAT for PPE, medical devices, disinfectant and medical supplies from non-EU countries.

Key takeaways

– The UKGT is estimated to ensure that around 60% of trade will come into the UK tariff free on WTO terms or through existing preferential access from January 2021. Future trade agreements will increase this proportion.

– The UKGT will provide important leverage in future trade talks with EU, US, New Zealand, Japan and other key trading partners.

– The UKGT increases the importance of getting a trade deal with the EU to avoid an increase in business costs and a negative impact on the wider economy.