UK to reduce import tariffs in 2021
The UK Government has announced it is planning to reduce many import tariffs in January 2021. The new UK tariffs, called the UK Global Tariff, or UKGT, will replace the EU’s tariffs which the UK currently use.
What is a tariff?
A tariff is a tax on imports into a country. Most countries use these taxes. So if a business exports products from the UK to another country, the importer in the recieving country pays the tariff.
Many countries have trade agreements which mean tariffs are reduced.
The reason the UK is setting up it’s own tariffs is linked to the UK leaving the EU. At the moment, the UK uses EU tariffs which are the same for all EU countries.
Why are they reducing?
According to the UK Government, the new UKGT will reduce the level of taxes on imports, as they will remove or reduce some existing EU tariffs.
- Removing all tariffs that are below 2%
- Dishwashers, Freezers, Sanitary Products, Paint, LED Lamps, Thermostats and others reducing to 0% or no tariff.
The Government claim 60% of imports to the UK will not be taxed, leading to the potential for lower prices for us.
Some products will still have a tariff. The Government say this is to provide ‘protection’ for some industries facing increasing overseas competition. Example of this include;
- Lamb, Beef, Poultry
- Ceramic Products
According to Tory MP Liz Truss, International Trade Secretary;
“For the first time in 50 years we are able to set our own tariff regime that is tailored to the UK economy.
Our new Global Tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products.
With this straightforward approach, we are backing UK industry and helping businesses overcome the unprecedented economic challenges posed by Coronavirus.”
Business Lobby group the CBI stated;
“The new tariff scheme will provide businesses with much needed clarity on post-Brexit trade. Simplifying the system, scrapping tariffs under 2%, reducing duties on sustainable products are all things firms can work with. Sticking closely to many existing tariff levels will give other countries incentive to agree trade deals with the UK.
However, businesses will need time to assess the detail and ensuring there’s a system in place to address issues as they arise will be critical. Crucially, firms no. 1 priority is for the government to strike a deal with the EU and ensuring continuity of existing trade deals.”
Notes and Sources