'Sledgehammer' tariffs ignite furor in Britain

Top News | Associated press 14 Mar 2019

Business leaders reacted with fury yesterday after the British government unveiled a temporary tariff regime that could see higher prices on an array of imports ranging from cars to butter if the country crashes out of the European Union later this month without a deal.

The tariffs - lasting for up to 12 months - were published hours before lawmakers were expected to vote against the possibility of the country leaving the EU on the scheduled Brexit date of March 29 without a deal.

Lawmakers were expected to reject that proposition, a day after they rejected Prime Minister Theresa May's divorce agreement for a second time.

"What we are hearing is the biggest change in terms of trade this country has faced since the mid-19th century being imposed on this country with no consultation with business, no time to prepare. This is no way to run a country," said Carolyn Fairbairn, director-general of the Confederation of British Industry.

"This is a sledgehammer for our economy."

The tariff proposals come amid concerns that a "no-deal" Brexit would have a catastrophic impact on the British economy, driving up costs for businesses, reducing investment and threatening jobs.

The government said the plan actually represents a "modest liberalization" of trade rules, with no tariffs on 87 percent of imports by value. Though a large chunk of products will not be facing any extra cost, officials in the Department for International Trade are proposing tariffs and quotas on some goods to help British industries that are currently protected by high EU tariffs or face unfair trading practices, such as state subsidies.

In a statement, the department said the tariff regime is "designed to minimize costs to business and consumers while protecting vulnerable industries."

The proposed tariffs could lead to higher prices for goods such as cars, clothes, beef, chicken and pork imported from the continent.

The Bank of England has estimated that inflation could rise from around 2 percent now to almost 7 percent within months of a disorderly "no-deal" Brexit.

For example, whole fresh chicken would be subject to a tariff of 19.60 euros (HK$173.85) per 100 kilograms. That would increase the price of a whole chicken by about 7.8 percent.

But the tariff plan is full of anomalies. British sheep farmers would be protected by tariffs, but vegetable growers would not. Finished cars will face tariffs, but car parts will not as trade officials seek to protect the supply chains of British carmakers.

"No policy on tariffs can come close to compensating for the disruption, cost and job losses that would result from no deal," said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders.

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