UK inches towards potential EU trade war – impact on European logistics

After the PM’s trip to Northern Ireland this week failed to trigger any progress in the dead-locked political situation, the government has announced plans to table legislation that will scrap parts of the Northern Ireland protocol, in spite of fears that it could initiate a trade war with the EU.

The political parties in Stormont all criticised the prime minister after a series of meetings on Monday and the Democratic Unionist Party (DUP) has withheld its support until the government takes “decisive action” on post-Brexit trade arrangements.

Mr Johnson said a “legislative solution” was needed and the Foreign Secretary has now confirmed that the government would, in the coming weeks, introduce legislation to strip away parts of the protocol to enable easier trade, though it would have to go through parliament, which could take months.

Brexit opportunities minister, Jacob Rees-Mogg claimed last week that the EU “wants to make the UK feel bad about having left the European Union”, but doubted the EU would retaliate with something as severe as a trade war, saying it would be a “pretty silly” thing to do.

While the former Brexit minister David Frost has said the UK may face EU retaliation, although it would be disproportionate to the trade involved and logic may yet prevail, but if it does happen, “we should not fear it.”

However, Britain’s former ambassador to the EU, Sir Ivan Rogers, has warned there’s a severe risk that we are heading into a trade war and that the threatened legislation wouldn’t even have to come into force for the EU to think that it was entitled to retaliate.

While many hope that the EU would launch lengthy legal proceedings that could result in the UK being fined, the real fear is they may terminate the trade deal with the UK and impose tariffs on all British exports to the bloc.

The imposition of tariffs could be triggered quite quickly and the EU could also increase border checks, to disrupt Channel trade and even if the UK does not retaliate, there could be shortages and price rises, which would be deeply unpopular, at a time of rampant inflation, a cost of living crisis and looming recession.

The EU has already ejected the UK from its flagship Horizon research programme because it no longer trusts the government and could take similar steps in other areas.

Let’s hope the politicians can agree a sensible solution, quickly, encompassing all stakeholders and rather than confuse future trade within Europe, simplify it. We are closely monitoring the situation and the impact and ‘fallout’ of any negative outcome over coming weeks and months, and possibly beyond.

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