How will Brexit impact import and export tariffs?
Brexit’s impact on import and export tariffs is a prime concern of business owners. Until Article 50 is triggered, the UK is still able to benefit from the existing trade arrangements.
If Britain leaves with a deal, the effect on import and export businesses will hopefully be minimal. But if Britain leaves the EU without a deal, the impact on import and export tariffs won’t be as simple. Here’s everything we know so far to help your business out in the short-term:
No-deal Brexit impact on import and exports
If the UK leaves the EU without a deal, it will enter the single market and custom union overnight. This means there’s a high risk of exposure for goods to undergo a range of EU checks and taxes.
In March, the UK government put forward a temporary trade ‘contingency plan’ in case a no-deal. This should mean:
- 87% of imports by value will be tariff-free (current figure is 80%).
- Products from non-EU countries will be favoured.
- 92% of imports from the rest of the world will be exempt from border duty (up from 56%).
- 82% of imports from the EU will be tariff-free (100% currently).
The World Trade Organisation option
The World Trade Organisation (WTO) has 164 members and is the only global organisation responsible for dealing with trade rules between nations. All agreements are negotiated and signed by its members and approved by each countries’ Parliament.
The UK currently trades with WTO members under the EU, which has around 40 free trade deals, covering over 70 countries. This means the UK can currently trade with these countries without paying tariffs.
In the scenario of a no-deal Brexit, the UK would automatically lose tariff-free access to these countries and will have to trade under WTO rules.
If a deal is agreed, the UK can negotiate trade deals with countries the EU has no agreements with, e.g. the US (which accounted for 19% of UK exports in 2018). This means the UK needs to negotiate a free trade deal with the EU to guarantee ongoing free trade there. In 2018, trade with the EU accounted for 46% of UK exports.
The UK is working to replicate the EU’s trade agreements “as far as possible”. 13 deals have been signed so far:
- South Korea
- Central America
- Palestinian Authority
- Faroe Islands
- East and South Africa
- Caribbean countries
- Pacific Islands
No matter what the outcome of import and export tariffs after Brexit, Xendpay’s online transfer service can help businesses to reduce costs on global payments. Xendpay provide fair, fast and safe low cost global money transfers. Businesses can transfer up to £4K a year without paying any transfer fees on overseas transactions, with low fees once that amount is reached.
So whether you’re sending money to a supplier, paying invoices and employees abroad or importing and exporting to and from the EU, Xendpay can help you reduce costs before and after Brexit.
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Brexit – a game changing event that is set to affect UK businesses of all sizes and industries, as well as businesses in the EU who are trading with the UK.