European cars subject to 10% import tariffs from 2021
UK will default to World Trade Organisation rules from 1 January 2021 unless a a free trade agreement is struck with the EU
European cars imported into the UK will be subject to the same 10 per cent tariffs as those brought in from other countries from 1 January 2021, unless a free trade agreement (FTA) is struck with the EU before then, the Government has confirmed.
Unless the Brexit transition period - which is due to end on 31 December this year - is extended, the UK and EU have what’s left of this year to negotiate an FTA and prevent the UK completing its departure on World Trade Organisation (WTO) terms.
If the UK does leave on WTO terms, the zero per cent tariff on cars imported from the EU will be scrapped in favour of the default 10 per cent levy. In most cases, the bill for this will likely be footed by British motorists buying European cars rather than manufacturers. The Society of Motor Manufacturers and Traders previously warned a no-deal Brexit would add around £1,500 to the cost of an average new car.
It is possible that the UK could strike an FTA with the EU at a later date to change this, though. Furthermore, post-Brexit Britain will be able to send its own representative to the WTO, meaning FTAs could be struck with other big car-making countries, such as the US and Japan.
Although European cars are looking likely to become more expensive, the Government is removing tariffs on £30 billion worth of other imported products.
Liz Truss, Secretary of State for International Trade, said: “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.”
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