Industry sources this week told Drapers that prime minister Boris Johnson must make zero-tariff trade the “number one priority” after Brexit.
However, Johnson said in a speech on Monday that he would rather accept tariffs than European Union law, as he began trade talks with Brussels following the UK’s exit from the bloc on 31 January.
This came after the EU’s chief negotiator, Michel Barnier, said the EU was ready to offer a “highly ambitious trade deal” that included zero tariffs and quotas, but would also demand “specific and effective guarantees to ensure a level playing field”.
Johnson said: “There is no need for a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar, any more than the EU should be obliged to accept UK rules.”
Industry sources warned that tariffs would have a “terrifying” impact on trade.
“Without a tariff-free trade deal, everything is going to get more expensive and everything’s going to be more difficult,” one high street supplier said. He added that imposing tariffs would require bonded warehousing, to minimise the duty paid on moving goods: “If your main warehousing is in Europe, you’ll bring them to Europe and pay the duty on them. As they then cross the UK border, if there is no free trade then you’ll pay duty again.
“You have to pay for a bonded warehouse, but if you’re a small business it’s really punitive because the cost is really high.”
Adam Mansell, CEO of the UK Fashion and Textile Association, said: “The absolute number one priority for the sector is zero to zero [in and out] tariffs. The idea that we would face tariffs on goods coming into the UK, or our exports to the EU, is terrifying.
“The EU is our largest export market by a country mile – 76% of our exports go to the EU across the fashion and textile industry, so an additional cost on top of that would be catastrophic.”
One womenswear supplier agreed: “Tariffs would not be good at all. I think the only thing that’s manageable is if people are aware of it when they’re selling. The problem is, for tariffs that come in after the event, who is responsible for that hole? Is it the manufacturer or the customer who will pay for it?”
One brand source said the most important thing was to ensure the UK has free trade with the EU: “Before the EU, we used to belong to the European Free Trade Association, which was exactly what it says on the tin. No politics, no regulation, nothing other than a free trade, no duties.
“When we joined the EU, it was supposed to be an expanded version of that. Unfortunately, it morphed into this political entity. The most important thing is free trade.”
The CEO of one menswear multiple said it would also be important for the UK and Turkey to secure a separate trade deal: “Turkey is a big supplier in terms of fabrics, and has a customs union with the EU, so the UK will have to do a deal.”