Deal for British carmakers to avoid high Canadian tariffs set to expire: U.K.

Britain said on Wednesday that post-Brexit trade arrangements with Canada that enable its carmakers to avoid high tariffs there were likely to expire next week.

Britain said on Wednesday that post-Brexit trade arrangements with Canada that enable its carmakers to avoid high tariffs there were likely to expire next week, marking the latest deterioration in trade ties between the historic allies.

Britain and Canada paused talks over a new free trade agreement in January amid disagreement on Rules of Origin (ROO) arrangements, due to expire at the end of March, as well as mutual unhappiness about a lack of access to agricultural markets.

On Wednesday, Britain said Canada had decided not to roll over the Rules of Origin arrangements it had agreed when it left the European Union, terms that had been used as a stop gap while the two sides tried to agree a full trade deal.

Under the terms both sides agreed that UK goods that used inputs either from the EU or processed in the bloc should count as made in the UK and as such qualify for lower tariffs in Canada. An end to the agreement could leave carmakers that don’t meet the new ROO requirements facing a tariff of 6.1% in Canada.

“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,” a spokesperson for Britain’s Department for Business and Trade said.

“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.”

Canada’s trade ministry did not immediately respond to a request for comment.

British auto exports to Canada were worth almost 700 million pounds ($883.68 million) in 2023.