Business

Reality Check: Would EU or UK lose most from tariffs?

Liam Fox saying: The European Union has a massive surplus in goods with the UK. Who does it harm more if we end up in a new tariff environment?

The claim: The European Union would lose out more than the UK from the introduction of tariffs.

Reality Check verdict: The EU would risk more in cash terms. The UK would risk a higher proportion of its exports.

International trade secretary Liam Fox gave a speech on Thursday about the benefits of free trade.

"Don't just look at it from a UK perspective," he said.

"The European Union has a massive surplus in goods with the UK. Who does it harm more if we end up in a new tariff environment?"

The EU does indeed have a trade surplus with the UK in goods, which means that EU countries sell more goods to the UK than they buy from us.

The UK economy, which is dominated by the service sector, has a trading surplus in services with the EU, which is not big enough to cancel out the deficit in goods.

But Dr Fox was talking about goods, not services.

In 2015, the UK trade figures show the UK exported £134bn worth of goods to the EU and imported £223bn worth.

The question Dr Fox asked was who it would harm more if there were tariffs introduced, which damaged that trade.

In cash terms, clearly the EU has more to lose. But in percentage terms the picture is different.

UK exports of goods to the EU in 2015 accounted for 47% of total goods exports. According to the NIESR, EU goods exports to the UK account for about 16% of its total exports of goods.

So if you're looking at whether the UK or the EU would risk a greater proportion of their trade from tariffs, clearly the UK would lose more.

There may be some impact on these figures from what's called the Rotterdam Effect, but it makes a relatively small difference, as we discussed in this Reality Check.

But of course the EU does not negotiate only as a bloc - it is made up of 27 other countries, some of which will be less concerned about UK trade than others and all of which will get to vote on the eventual deal.



More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites