Brexit, remember that old name? How could we forget the monumental decision when the United Kingdom voted for their exit from the European Union in Summer 2016. There has been much back and forth over whether British control over their own policies will strengthen them or hurt them? Also, that has led to much speculation over what that means for the rest of the world. It seems that we are now getting some news over what may lie ahead of the March 2019 exit.
On Tuesday, the British Retail Consortium (BRC) said that after March 30, 2019 the U.K will officially lose the zero or low tariff benefits and reduced trade barriers. Without EU trade deals, the loss of benefits will transfer to the consumers in the form of higher prices. Sourcing Journal Online reported that there has been much pressure to secure new trade deals outside the EU. The BRC furthered, “If new trade deals aren’t put in place before the separation, clothing will be one product category that will be “particularly affected,” BRC said. What seems to be the single most important trade partner for the U.K is Turkey as the EU pays zero tariffs for clothing imports from Turkey. On its own, they would now receive the tariff rate of 12 percent.
Could Brexit Prompt Further Protectionism?
Aside from the Brit’s paying more for a t-shirt, people are wondering whether this will spark more countries to opt out of trade deals. The great debate stems from whether countries would grow stronger should they start enforcing tariffs on imports. Which at first glance seems like it would encourage the movement of domestic product? But, when a country does this will it reduce their global economic power? As with everything there are pros and cons to both scenarios. Interestingly, the future results of the exit could have an opposite effect. Could the answer be to enact free trade with all nations? Some believe reducing tariffs on imports could fire up the global trading economy.
The Brexit deal has many subtle nuances that will affect its outcome. Could the U.K. emerge stronger than ever or lose its way economically? This piece is just the tip of the iceberg. And, while it is important to be aware, only time will tell what effect it has on not only Britain’s economy, jobs, trade and its citizens. And, also those all across the globe. If the fashion industry ends up being one of the hardest hit that will take much restructuring to find how to mobilize in the new climate.