The United Kingdom Global Tariff (UKGT) – 5 Policy Changes


One of the UK’s biggest goals for its post-Brexit economy has been regaining control and a focus on worldwide trade.

“Global Britain” has been the mantra coming out of Number 10, Number 11, and various other government departments. A major plank of this new trade policy direction is the new streamlined, simplified, and strategic UK Global Tariff (UKGT), which will be replacing the Common External Tariff (EU CET) next year. But what exactly does that mean for you and your business? To help you understand that, here are some of the main changes coming with the UKGT. In another post next week, we’ll be outlining some more specific industry changes that could affect your business.

Policy Changes
1. Global tariff-free trade, not just European

The overall goal of the UKGT is to have 60% of all international trade entering the UK be tariff-free.

While goods coming into the UK from other EU countries had no tariffs under the EU CET, tariffs were applied to goods coming from the rest of the world. These tariffs were directed for the whole EU centrally.

Under the UKGT, the UK will set its tariffs by itself, without input from the EU. This means that a far wider range of countries will experience tariff-free trade into the UK, meaning UK businesses will see imports of many different products become noticeably cheaper.

2. Currency Control

Under the UKGT, British Tariffs will be measured in Pounds Sterling, not Euros as it was under EU CET. This change will affect the two most common types of tariffs.

  • Ad Valorem tariffs (or AV tariffs) which are usually expressed as a percentage of the final price
  • Specific Rate tariffs where there is a specific amount of money charged per unit

With AV tariffs, the UKGT will be a percentage of the final price as measured in Pounds, and with Specific Rate tariffs, the price is demarked in Pounds. From a political and economic position, this will bring about two main changes:

  • UK government decisions, and the decisions of the Bank of England, will have much more of an immediate and direct impact on the tariff’s real terms costs.
  • UK businesses will be less exposed to currency fluctuations and can make clearer long-term decisions about how much things will cost.
3. 2021 Timetable trajectory

COVID-19 has meant that Brexit timetables have been less focused on by mainstream media. To help this matter, government announcements have confirmed that the UKGT will be coming into effect on Friday, January 1st 2021. Items purchased on that day or after will be under the UKGT. Any prior purchases will be under the EU CET.

4. No Sub-2% tariffs

Fiddly tiny tariffs that don’t bring in much income are an easy simplification target. That’s why under the UKGT all tariffs under 2% will be eliminated. The so-called “nuisance tariffs” will be no more, as tariffs will be redirected onto products and items more important to the UK economy.

5. Rounded regulations

To make tariff calculations that extra simple, where some tariffs cannot be eliminated many will be streamlined. Specifically, removing numbers after the decimal point in percentages. Reading glasses will no longer have a 2.9% tariff, but 2% instead. Alarm clocks will see their 4.7% tariffs become just 4%. These are not only tariff reductions, they also make the overall process of tariff calculations much easier.

Shifts in international trade policy can mean big changes for businesses of all kinds. To make sure your systems can accommodate changes quickly and easily, an end-to-end solution is the optimal choice. Have all your business’s command and control functions in one place, so you can see and organise clearly what you need to do, and how you can best accomplish it. This makes it far simpler and faster to adapt to the likes of tariff changes and trade policy shifts. Talk to OrderWise to learn more about how end-to-end operations can help your business cope during changing times.