No-deal Brexit could see EU tariffs on UK Al

The EU imposes anti-dumping duties on various Chinese products, including aluminium foil and aluminium wheels. Earlier this month it launched an investigation into possible anti-dumping duties against aluminium extrusions from China, which already carry tariffs in Canada, the US, Vietnam and Australia.

The UK will continue operating under EU laws throughout the transition period, by the end of which the government has said it hopes to have secured a deal with the EU that would see trade flows with its biggest partner largely unaffected. But the prospect of such a deal has become less certain in recent weeks, with relations between EU and UK officials deteriorating and no apparent sign of progress towards a conclusion.

Prime minister Boris Johnson revealed on Thursday in his government's publication of its negotiating mandate for the EU talks that he is threatening to abandon EU trade talks in June and confirm a no-deal Brexit.

If no deal is agreed, the UK will revert to World Trade Organisation (WTO) rules, which would impose tariffs on some products traded with the EU. A duty of 10pc would be placed on cars, and aluminium products would be taxed at 7.5pc.

The UK would no longer fall under the EU's laws or protections, including the anti-dumping duties on Chinese aluminium products. The latest EU investigation into aluminium extrusion imports from China may result in new tariffs, but these would not apply to the UK after the Brexit transition period ends on 31 December this year.

"If there is no deal, we revert to WTO rules and risk the tariffs coming off Chinese products," a representative of the UK Aluminium Federation (Alfed) said at a parliamentary briefing at the House of Commons on Wednesday.

"If the UK is left exposed [to tariff-free Chinese imports] we'd see potentially cheaper products, but it would hurt the domestic industry and the supply chain overall," he said, pointing to the example of the US aluminium foil industry, where cheaper Chinese imports led to a sharp fall in domestic production.

The UK government said last year that a no-deal Brexit would see 92pc of imports from outside the EU be tariff free, from 56pc before Brexit. Some tariffs will still protect automakers and food producers, but the EU tariffs will all be lifted. Combined with the UK's proximity to the European market, that would make it a very attractive destination for Chinese aluminium producers.

"If China focuses on a UK with zero import tariffs, we are dead in the water," a second Alfed member said.

Attendees at the parliamentary briefing discussed the potential not only of China flooding the UK market with cheap aluminium units, but also that Chinese companies could purchase manufacturers in the UK in order to process that aluminium into products for sale to the European market under the 7.5pc WTO tax, rather than the higher tariffs applied to direct imports from China. Chinese aluminium foil imports into the EU are taxed at 14.6pc.

If that were to transpire, the EU could determine that it would need to impose further duties on aluminium imports from the UK, which it would see as a threat to domestic European industry because of any Chinese connection.

"I hope we have a good trade deal negotiated," the first Alfed member said.

Jethro Wookey