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UK cools trade heat as it suspends tariffs on chilli peppers

The UK Government has promised food businesses cheaper ingredients in time for the summer by suspending the UK global tariff (UKGT).

The list of commodities affected include dried raisins, pasta, fruit juices, coconut water, agave syrup, canned pineapple, shelled pine nuts and crushed, cut, or ground chilli peppers (like cayenne and paprika).

The UKGT normally applies to all goods imported into the UK, with the exceptions of exporting countries with trade agreements with the UK, goods covered by the Developing Countries Trading Scheme, and relief or tariff suspensions.

The temporary suspension will result in tariffs on 89 products, both food and non-food, being cut to zero until July 2027.

The savings for businesses are estimated at £17 million a year, according to the government. Exporters to the UK will also be looking at the opportunities given the chaos created by the US president Donald Trump’s sweeping trade measures in recent weeks.

Businesses across the UK apply for temporary suspensions on a regular basis by providing evidence of the benefits to themselves, their sector, and the wider economy.

The UK had already reduced tariffs on certain imported goods, such as fruit juices from Peru. “Free and open trade grows economies, lowers prices and helps businesses to sell to the world, which is why we’re cutting tariffs on a range of products,” said UK business and trade secretary Jonathan Reynolds.

Prices for ingredients could fall

The new zero tariffs on food and drinks could mean lower prices in supermarkets, restaurants and pubs, provided businesses pass them on to consumers.

The announcement comes just weeks after the Food and Drink Federation (FDF) warned that “doing business in the UK is becoming increasingly expensive”. Responding to the latest rates of food and non-alcoholic drinks inflation figures, the membership organisation which represents the industry’s manufacturers, said businesses continue to grapple with rising energy and commodities prices.

The current situation has led to a slump in confidence levels. The FDF’s most recent quarterly State of the Industry report found confidence among the UK’s 12,500 food and beverage manufacturers declined sharply over the past year, dropping to -47% in Q4 2024 compared with -6% in Q3 2024.

Higher Employer’s National Insurance Contributions have since kicked in and there are concerns about the cost implications of the upcoming extended producer responsibility on packaging regulations (pEPR).

Packaging prices present problems

The new packaging regulations shift the full financial responsibility for managing packaging waste onto producers, ensuring businesses who place packaging on the UK market contribute to its end-of-life management. Harder-to-recycle materials attract higher fees.

This has been reported as a ‘seismic shift’ in the economics of food and drink packaging, with additional costs estimated at over £1 bn in the first year.

Many companies already have to report data, with full financial responsibilities coming into force in October 2025. The agreed fees will be published in June and industry groups have been calling for clarification on exactly how the money will be spent by local councils.

Food industry representatives have also been pushing for the long-delayed regulations – which they are now referring to as a ‘tax’ – to be postponed further given the current market conditions, both nationally and internationally.

The UK Government is currently negotiating trade deals with India, the Gulf Cooperation Council, South Korea, and Switzerland. However, relationships with the US and EU remain in the spotlight.

A potential trade deal with the US has once again raised fears over imports of ‘chlorinated chicken’ and ‘hormone-pumped’ beef. Late April has been billed as crunch time for any potential US-UK deal.