Tariffs could inflate the current cost of some traded dairy products by as much as 50-60% if they were imposed between the UK and EU after Brexit, according to AHDB Dairy.
The UK currently enjoys barrier-free trade with other EU member states and has indicated it will be seeking a free-trade agreement with the EU.
However, if this cannot be achieved, the introduction of import tariffs is a potential scenario.
Import tariffs are customs duties paid when merchandise is imported. They can be based on a percentage of the product’s value or a fixed charge per unit or weight.
The size of the tariff can vary significantly between products and importing nations. The graph below shows the cost added to dairy commodities by applying the EU’s current import tariffs on goods from outside the Union.
EU import tariffs
Last year, around £3.5bn worth of dairy produce was traded between the UK and EU, with the UK importing £2.6bn of EU product, while exporting £0.9bn worth.
AHDB Dairy says that if the EU’s current tariffs were to be applied in both directions, it could theoretically add costs in the region of £1.5-2.0bn per year.
In addition, non-tariff barriers such as import certification procedures, can also add significant costs.
AHDB Dairy said: "We don’t yet know what the trade relationship between the UK and EU will look like after Brexit. In reality, if tariffs were introduced, current trade patterns would likely be significantly disrupted by the added cost."
