No-Deal Brexit tariffs will make bikes more expensive

Ben Purvis_BikeSocial
By Ben Purvis

Writing about bikes for 20 years. Published in dozens of titles on five continents. Mildly obsessed with discovering how things work.

EU and UK Flags Merging | BikeSocial

 

Almost lost among the Brexit chaos this week was this morning’s unveiling of the planned list of tariffs that the UK will impose on imports if it leaves the EU without a deal. And while the vast majority of goods will be tariff-free under the plans, EU-made motorcycles will be smacked with new import duties likely to result in price rises for some of the country’s most popular models.

At the moment, having voted down the deal agreed between the EU and Theresa May’s Government the UK is set to leave the EU with no deal on 29 March. That might well change – Parliament is due to vote on proposals to rule out a no-deal exit later today and possibly to delay Brexit in another vote tomorrow. But if there’s no compromise and no delay, a no-deal Brexit is the default position.

That means the UK will immediately revert to trading under World Trade Organisation (WTO) rules from 11pm GMT on 29 March 2019. Those rules mean the UK is able to set its own tariffs on imports, but that its exports will also be subject to other nations’ tariffs.

The planned ‘no-deal’ tariffs, revealed this morning, show that while many goods will be imported with no tariffs at all, motorcycles are among the goods that will be hit with extra taxes.

The planned duties fall into line with existing EU import tariffs already levied on non-European sourced machines, with taxes of 6% to 8% depending on cylinder capacity. At the moment, we don’t have to pay that duty on European-made bikes – BMWs, KTMs, Ducatis, Aprilias, Piaggios etc – but that will change if we leave on 29 March with no deal.

What’s more, the EU recently implemented a trade deal with Japan that will see it reduce duties on Japanese-made bikes to 0%. Without its own trade deal with Japan to mirror that move, in a no-deal UK future the existing import duties will remain in place.

The planned tariffs will impose an 8% duty on bikes and scooters with capacities below 250cc, and a 6% rate on bikes larger than 250cc.

The tariffs will be an incentive for UK buyers to opt for a British-made bike like a Triumph. However, a no-deal exit also means bikes made in this country will face the same level of import duties when sold across the Channel.

Of course, the tariff rates announced today relate purely to a no-deal exit from the EU. It currently seems likely that Parliament is likely to vote to eliminate the possibility of leaving without a deal this evening before voting tomorrow to extend the ‘Article 50’ period, putting off our exit from the EU until a date later than 29 March in the hope of reaching a better arrangement. However, nothing is certain, and that means there’s a still a definite chance that in just a couple of weeks’ time European-made bikes including many best-sellers like BMW’s R1250GS will be struck by the planned no-deal tariffs.

Taking the R1250GS as an example, if BMW opts to pass on the expense of the tariffs to the customer, a basic £13,415 model could end up costing around £800 more, while a high-end derivative like the £17,950 R1250GS Adventure Exclusive TE might see a rise of over £1000.

While motorcycles are set to be subject to extra costs under the planned no-deal tariffs announced today, the vast majority of goods are set to be tariff-free.

In particular, parts and accessories for motor vehicles aren’t going to be taxed, in an effort to smooth the supply chains for manufacturers – something that Triumph, which uses EU-made Brembo brakes, not to mention imported suspension and electronic components, will be relieved to hear. And since the tariffs apply across the board, it means that duties currently paid on some parts of non-EU origin will actually get cheaper. At the moment, non-EU motorcycle parts and accessories are subject to a 3.7% duty and motorcycle tyres are taxed at 4.5% when they enter the EU.

Will everything be clearer in a couple of days’ time after Parliament’s next round of Brexit votes? On current form, don’t bet on it…

 

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