Britain’s trade secretary has raised the possibility of tariffs on global imports being slashed to zero in the event of a no-deal Brexit in March.
Liam Fox told MPs that he had never advocated full liberalisation of the UK’s tariff regime but said the decision was under consideration by the government.
The development came as the head of the EU leaders council Donald Tusk made a provocative attack on the Brexit supporters, condemning their failure to propose a workable model for trade with Europe.
Speaking just a day before Theresa May, the British prime minister, travels to Brussels for last ditch talks on the so-called backstop to preserve free trade across the Irish border, Mr Tusk said the Withdrawal Agreement reached last year could not be reopened.
Once described as a nuclear option, zero tariffs under the World Trade Organisation rules would allow Britain to accept imports from around the globe with minimum regulation.
Mr Fox said that government would soon publish its decision on tariff levels if the UK failed to strike a deal with the European Union about its future political and trade relationship.
Britain is due to leave the EU in less than two months on March 29 but the prospects of securing an agreement – strongly supported by the majority of businesses - are dwindling.
Premier Theresa May’s proposals were rejected by MPs and the EU has so-far refused to renegotiate the deal.
Senior ministers have previously promoted the idea of Britain’s post-Brexit future as a low-tax, low-regulation economy but the prospect of slashing tariffs has angered industry leaders.
Mr Fox first raised the prospect of zero tariffs in a meeting last week with senior officials from Britain’s ceramics industry.
The industry has warned that cutting 12 per cent tariffs on imported ceramics from countries such as the UAE and Brazil would devastate the home-grown industry that employs more than 20,000 people.
While consumers would benefit from cheaper imported goods, a unilateral reduction of tariffs to zero would hit industries employing millions of people, MPs told the trade secretary on Monday.
The domestic meat industry is protected by 39 per cent tariffs and imported cars have a 10 per cent tariff, the all-party international trade committee heard.
Mr Fox said that switching to zero tariffs would result in a sudden shock of competition for some sectors and would prevent the UK from giving preferential tariff rates to developing nations.
“That is not a position I have advocated but it’s not a decision alone for me to take,” Mr Fox said.
He said the government was considering all elements including the benefits of cheaper goods to consumers, and that 23 per cent of all UK exports contained imported materials.
Mr Fox said that the UK would not be able to limit a zero-tariff stance to the EU and would have to apply it to the rest of the world.
“Unilateral liberalisation is not what I would propose and I’ve not heard anyone else in government propose it,” Mr Fox told the MPs.
Laura Cohen, chief executive of the British Ceramic Confederation, said zero tariffs would be “disastrous” but government officials had been raising the prospect for six months.
She said Mr Fox told them in meetings that they needed to make the case for specific tariffs for products.
“If zero tariffs come in, it’s about giving a leg up to foreign competitors by removing their import tariffs which threatens British manufacturing jobs,” she told the BBC. “We would be flooded by imports.”
It would also represent a competitive threat to more expensive EU exports to Britain and almost certainly come at the expense of goodwill between the departing member and the other 27 states.
Comments like those from Mr Tusk have shown how fractious relations have become since the 2016 referendum. Mr Tusk was speaking along Leo Varadkar, the Irish prime minister, who was caught on hot mic warning him that his remarks would draw a backlash.
A British government spokesman said it was up to Mr Tusk to decide if his language was helpful but cabinet minister Andrea Leadsom, a prominent Brexit supporter, called for an apology. She said the remarks were "completely unacceptable" and "spiteful" following a democratic vote to leave the EU.