Canada is set to raise trade barriers with the UK after refusing to engage in talks to extend a special post Brexit relationship on zero tariffs.
The new tariffs are a Brexit setback and will hit the car industry most which in 2023 was worth £700 million in exports to Canada but will also see costs passed on to Canadian businesses and consumers.
It comes despite efforts by Business and Trade Secretary Kemi Badenoch to open talks to extend a zero tariff arrangement while the UK and Canada try to agree a free trade deal.
UK trade officials have been left mystified by the refusal of Canada to engage in talks over an extension and have told Express.co.uk that they have no idea why Canada would want to hurt its own businesses as well as British ones.
But as of April 1, a 6.1% tariff will be imposed on vehicles and other industries will be hit too.
A Department for Business and Trade spokesperson said: “Canada’s decision not to roll over these rules of origin will increase the cost of trade and hurt businesses on both sides of the Atlantic. The UK Government remains ready to work with Canada to find a solution that works for both countries, but we won’t accept rowing back on the current terms.
“We are fully backing UK businesses, including our world-leading automotive industry, with £2 billion of capital and R&D funding to 2030 as part of the Advanced Manufacturing Plan. Tata’s investment of over £4 billion to build a new gigafactory in Somerset and Nissan’s £2 billion EV investment in Sunderland shows the UK’s auto sector continues to go from strength to strength under this government.”
There is frustration that even after Ms Badenoch had discussions with Canada’s trade minister Mary Ng at the World Trade Organisation (WTO) in February, Canada has just sat on its hands.
A UK government source said: “It’s a shame Canada can’t see that now, more than ever, it’s vital for allies to work together and remove barriers to trade, not reinforce them.
“The UK has been trying to find a way through with Canada for several months, including Kemi discussing with her counterpart at the WTO in February, but sadly Canada has shown no willingness to agree an extension.
“There’s only so long you can bang your head against a brick wall when the other side isn’t willing to find solutions. At the end of the day, this will only end up costing their own consumers and businesses.”
A possible cause of the refusal to engage in extension talks could be the row which saw the talks over a full British/ Canada free trade deal collapse in January.
Canada had demanded that Britain reduced its standards on food quality in exchange to give cheesemakers in the UK access to the Canadian market.
When Ms Badenoch refused the talks stalled and have failed to get off the ground again.
Trudeau is also known to be very pro-EU and anti-Brexit but on the other hand has also been looking at joining a UK defence pact on nuclear submarines with the USA and Australia.
