New tariffs are set to hit British firms exporting to Canada from Easter Monday, after attempts to extend the trade exemption failed.
As of April 1, industries including car manufacturers, processed foods and chemical exports will lose the tariff-free access to Canada they currently benefit from.
The exemption from rules placing tariffs on goods with parts from the EU was temporarily agreed under the trade deal rolled over with the North American nation post-Brexit in 2021.
But now the status is set to expire and the UK has been unable to agree a deal with Canada to extend it – or to negotiate a new Free Trade Agreement (FTA).
It comes after business and trade secretary Kemi Badenoch put discussions on ice in January when she refused to budge on Britain importing hormone treated beef – while UK farmers enjoyed selling cheese in Canada without facing import taxes, sparking anger.
Badenoch then told MPs talks “have not broken down” but her claim was disputed by Canada’s high commissioner to the UK, Ralph Goodale.
He wrote a letter to the House of Commons business committee in February stating “there have been neither negotiations nor technical discussions” since the pause.
A UK government source told City A.M.: “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.
UK government
“At the end of the day, this will only end up costing their own consumers and businesses.”
While a spokesperson for the Department for Business and Trade 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.”