How many times over the past few months have some remain supporters tried to tell us that tariffs on imported goods are a very big deal indeed? Were trade between Britain and the EU to revert to World Trade Organisation (WTO) rules, they assert, the UK economy would be reduced to ruins. Food prices would soar, leaving millions scrabbling around in bins. British firms will never export anything ever again.
This morning comes a slightly different tack. Actually, it seems that tariffs don’t really matter all that much at all. Removing them, according to reports broadcast loudly at various points during the Today programme this morning, will hardly affect consumer prices.
The reason for the sudden change of heart? The IFS has produced a study claiming that if a post-Brexit UK government took the opportunity to remove all tariffs on imported goods the prices paid by consumers in the shops would fall only by between 0.7 per cent and 1.2 per cent. Big deal, in other words: we would be sacrificing our relations with our European neighbours for some pathetic little saving in the shops.
Given its output over the past couple of years, the claim of the IFS to be neutral in the Brexit debate in highly questionable. Director Paul Johnson has used words like ‘damaging’ to describe leaving the EU. Nevertheless, I will take the IFS at its word on its calculations. But to produce a figure for the average effect of zero-tariff trade on prices in the shops somewhat misses the point. Tariff rates paid by importers of non-EU goods are hugely variable, and highly concentrated on food – a sector which makes up a disproportionate slice of spending by low income groups.
Average tariff rates on vegetables, for example, are 11.1 per cent, on oils and fats 12.7 per cent, on prepared food 18.4 per cent and on animals and animal products 32.4 per cent. Remove those tariffs and it will lead to substantial reductions in the shops.
Moreover, it will lead to food exporters in developing nations regaining the comparative advantage they ought to have when selling us food, but which has been deliberately suppressed in order to protect European farmers. We dole out ever larger quantities in foreign aid, yet we could help low income countries, as well as our own poor, by eradicating protectionist tariffs on food.
The moral element of the Brexit debate is rarely made. It is time it was given far more prominence.