The Government has admitted what has been obvious since Adam Smith, tariffs only serve to make your own population poorer
Tariffs are often used to protect domestic industries or reciprocate, in the case of the New Zealand, both cases fall flat
Good news everyone. The Government has conceded the war on free trade. The Chancellor has seen the light and announced a package of tariff removals and extensions with the explicit aim of reducing household costs. That’s the good news. The bad news is that the package announced is pitiful. It should be celebrated that you will soon be able to buy cheaper imported kerosene, gherkins, olives (but not olive oil) and almost a hundred other goods. I must admit though that I find it hard to get too excited when the OBR forecasts project that the package will lead to a reduction in tariff collection of a mere £75 million, or 1.5% of the nearly £5 billion that HMRC collects yearly from tariffs.
Remember next time, dear reader, when you go to the supermarket to purchase your bananas that you may be spending more of your hard-earned wages on making sure that countries in Africa maintain a competitive advantage because it makes the British Government feel good about itself
In bringing forward this package, the Government has failed to take its own argument to its logical conclusion. They have admitted what has been blindingly obvious to everyone since Adam Smith published ‘The Wealth of Nations’: tariffs only serve to make your own population poorer. Having finally reached this position, why have they only reduced the tariff burden by 1.5%? In some cases, there are justifications for trade restrictions. Barriers on goods from states we are de facto at war with, such as Belarus and Russia, spring to mind, as well as production that has blatantly involved slave labour or other human rights abuses. Given that we still have tariffs in place with states like Australia, New Zealand and the USA, the claim cannot really be made that this excuse can be used for any sizeable amount of the remaining 98.5% of tariffs.
When it comes to Australia and New Zealand, we still apply tariffs to some of their beef. Despite the fact that in 2023 we entered into a ‘free trade’ agreement with New Zealand, we still levy a tariff on everything above the agreed quota explicitly to ‘protect the UK’s farming industry’. This is despite the fact that only a couple of weeks ago the Agricultural and Horticulture Development Board published data showing that domestic cattle supply is tightening.
Aside from the false idea that tariffs are necessary to protect domestic industries, they are also often justified through the need to reciprocate when foreign states place them on us. Even if cutting off one’s nose to spite one’s face was a sensible idea, this cannot be applied to the case of New Zealand beef because the Kiwis were sensible enough to abolish every single tariff on goods of British origin as part of the 2023 trade negotiations. These tariffs exist therefore for one reason, to ostensibly protect a domestic beef industry which is struggling to produce enough beef.
Equally egregious are the tariffs currently imposed on tomatoes from Morocco. As Lord Hannan pointed out in Parliament, we currently impose quotas on Moroccan tomatoes and tariffs apply over the amount prescribed. This is despite the fact that the UK tomato growing season only runs from March to November. Morocco on the other hand is able to grow tomatoes all year round with a concentration between October and March. Why on earth therefore are we in the middle of a cold British winter so concerned about Morocco providing an oversupply of tomatoes that we feel the need to tax the oversupply at 3.5%? Personally, I think it is wonderful and nothing exemplifies the beauty of free trade like the yearlong availability of tomatoes across Britain.
Staying on the subject of fresh vegetables, we come to the bizarre taxation of imported bananas. I don’t think you need to be a climatologist to know that the weather in Britain does not lend itself well to the production of bananas. Nonetheless, the Government has refused to remove the general tariff on bananas of £95 per tonne on the grounds that it would risk eroding the preferential duty-free status enjoyed by developing countries. Remember next time, dear reader, when you go to the supermarket to purchase your bananas that you may be spending more of your hard-earned wages on making sure that countries in Africa maintain a competitive advantage because it makes the British Government feel good about itself.
I have explored just a few of the many crazy and egregious taxes levied by the Government on imports that are ultimately paid by consumers. The truth is that nearly every single tariff, regardless of whether it applies to seasonal goods, or because it supports some silly foreign policy goal, is wrong. Bear in mind that I have only scratched the surface here and not even got on to non-tariff barriers that exist in the form of paperwork and bureaucracy. Having now recognised that tariffs are bad for consumers, the Government needs to go much further and unilaterally eliminate far more of them.
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