Nissan Could Face $600 Million-Plus Tariff Burden after Brexit

Nissan Motor Co. says new tariffs on the vehicles it makes in the U.K. could reach £500 million ($620 million) or more per year if the country fails to negotiate free trade agreements with Europe after leaving the EU two years from now.

Colin Lawther delivered the assessment to the House of Commons on Tuesday, Bloomberg News reports. He describes the potential impact of new taxes as “pretty disastrous.”

Carmakers in England currently can ship cars and parts to and from the EU without tariffs. But after Brexit, they could face World Trade Organization rules that would EU members to levy 10% tariffs on cars from the U.K. WTO policy also would allow taxes as great as 4.5% on components, many of which travel back and forth several times during the vehicle production process.

Lawther says Nissan’s big assembly plant in Sunderland, which employs 7,000 workers, could still make a profit under WTO rules. But doing so would require significant steps to improve productivity, coupled with the ability to source more components locally.

The Sunderland complex makes the Nissan-branded Juke mini-crossover, Leaf electric sedan, Note mini-MPV and Qashqai compact crossover. But Lawther says those plans, and the future of next-generation programs, could be “adjusted” pending the outcome of trade talks with the EU.