Customs duties in UK less than a third of the global average – benefiting consumers

Publications that covered this story include Taxation, on 26 July.
  • Relatively low import tariffs help keep goods costs down – but UK’s ability to maintain this post-Brexit uncertain

Consumers in the UK benefit from customs duty rates that are less than a third of the global average, saving them significant amounts of money, according to our latest study.

We found that customs duties in the UK are, on average, just 0.5% of the total value of imported goods. The global average is 1.8% of the total value of imported goods*.

This means that British consumers typically pay comparatively lower prices for goods than consumers in many other parts of the world – including many emerging economies – where costs are pushed up by higher import taxes.

However, with Brexit creating uncertainty over the future of UK trade deals, British consumers could be at a significant disadvantage if the UK fails to keep duties at a similar level on leaving the EU.

European countries generally impose comparatively low rates – the European average is 0.4% of the total value of imported goods. As a comparison, the G7 average rate is 0.8%.

Regional trade blocs such as the EU help to keep import tariffs low. Given the size of UK/European trade, this highlights the importance of securing low or no customs duties post-Brexit for both the UK and the EU.

Maintaining lower import tariffs can help to protect home-grown industries, by adding extra impetus to efforts to stimulate competitiveness and drive innovation. By contrast higher tariffs can significantly distort economies.

We studied customs duties levied by 22 major economies around the world as a percentage of the total value of their imports, as a simple indicator of the impact of a country’s trade barriers.

Roy Maugham, tax partner in our London office, says: “British consumers are enjoying comparatively low goods costs thanks to a light customs duty burden.”

“This is something the government should be at pains to protect during Brexit negotiations.”

“Membership of the EU single market has been a major factor in keeping tariffs down. Securing a good deal with the EU going forward and strengthening ties with other trading blocs must be a top priority from here on.”

He adds, “Free Trade Agreements are becoming an increasing critical – as well as contentious – policy area.”

“As protectionist moves on the part of some governments are putting some Free Trade Agreements under review, other countries are embracing them with as much enthusiasm as ever, if not more.”

For example, earlier this year, Canada entered into formal free trade negotiations with Mercosur, the South American trading bloc and also launched a consultation period on a possible deal with China. Its plans for a free trade deal with the EU have recently been approved by the European Parliament.

Roy Maugham says, “For a post-Brexit UK, the continued appetite on the part of many countries for mutually beneficial trade deals represents a huge opportunity but also poses a threat.”

“While a favourable attitude from some potential partners might make it easier for the British government to strike deals outside of the EU, there’s also a risk that if it fails to do so, it could be left far behind.”

Bangladesh has the highest customs duties as a proportion of total imports of any country in the study at 12.1%.

In the US, where protectionism has been rising up the political agenda, raising the possibility that higher import duties may be levied, customs duties are currently worth just 1.3% of the value of imported goods. This compares to 1.8% in China.

Amount of customs duties collected as a percentage of the value of total imports

Country Customs duties
collected (USD bn)
Value of
total imports
(USD bn)
Customs duties
collected as %
of total imports 
Bangladesh $5.48 $45.33 12.1%
Israel $0.79 $8.29 9.5%
Mexico $35.49 $427.63 8.3%
The Philippines $7.40 $90.12 8.2%
Brazil $18.59 $243.12 7.6%
Pakistan $3.33 $47.53 7.0%
India $32.58 $491.88 6.6%
Russia $8.48 $182.40** 4.7%
Argentina $2.67 $75.02 3.6%
BRICs $24.19 $740.51 3.3%
Nigeria $2.25 $73.46 3.1%
China $37.11 $2,044.65 1.8%
World $10.13 $562.97 1.8%
United States $34.98 $2,761.52 1.3%
Japan $9.50 $803.57 1.2%
G7 $8.92 $1,072.41 0.8%
Canada $4.11 $528.09 0.8%
Netherlands $3.39 $537.84 0.6%
Spain $1.92 $366.62 0.5%
Croatia $0.12 $23.00 0.5%
Italy $2.37 $491.40 0.5%
United Kingdom $3.86 $836.19 0.5%
Europe $2.50 $570.34 0.4%
Germany $5.47 $1,316.88 0.4%
Poland $0.73 $221.54 0.3%
France $2.13 $769.22 0.3%

*Based on World Bank data – 2015, most recent available year

**Russian Federation Federal Statistics Service, 2015