A failure by the government to secure a tariff-free trade deal as it negotiates the UK’s exit from the European Union will add “some £1,500” to the cost of every new car sold in the country, the Society of Motor Manufacturers and Traders (SMMT) has warned.
No deal at the end of the two-year Brexit negotiations would mean the adoption of World Trade Organisation (WTO) rules, in what the SMMT called “the worst foreseeable outcome” for the UK automotive industry.
The SMMT’s warning of the risks of failing to secure a tariff-free deal came as the UK government officially invoked Article 50 to begin the formal exit process.
Current WTO tariffs are 10% for cars and 2.5%-4.5% for parts. The SMMT has calculated that a 10% tariff would add £1.8 billion to the cost of fully assembled cars exported from the UK and £2.7 billion to those imported from the European Union – which, it says, would add some £1,500 to the cost of every one sold in the UK.
Such tariffs, as well as other non-tariff barriers and customs restrictions would put the motor industry at “an immediate competitive disadvantage, inevitably hitting consumers in the pocket with price increases and reduced choice”, said the SMMT.