Halting trade talks with Canada creates risk of tariffs, U.K. car industry warns

Britain’s decision to suspend talks with Canada on a free trade deal creates the risk of tariffs being imposed on British-made cars sold in Canada, the UK car industry warned on Friday, as it urged the two sides to return to negotiations.

Under Britain’s existing trade deal with Canada, which effectively rolled over after Brexit, UK carmakers can until April export vehicles containing EU-manufactured parts to Canada without facing tariffs.

“If UK car exports can’t use EU parts and components to avoid additional duties it creates a risk that tariffs, potentially charged on top of luxury goods taxes, could be reintroduced,” Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, said in a statement.

“Canada is an important market for UK car exports and, given the close ties between our two countries, the suspension of trade talks is especially disappointing and sends a signal that the UK’s world-class automotive products are not welcome in Canada,” he added.

Britain on Thursday suspended talks on a free trade deal with Canada amid unhappiness on both sides about the lack of access to agricultural markets.

Since leaving the EU in 2020, Britain has been trying to forge bilateral trade deals across the globe. It is currently negotiating a free trade agreement with India.

(Reporting by Sachin Ravikumar; editing by William James)