The impact of Brexit on … Oranges? And Orange Scones

I’m sure you’ve read about Brexit. You may have heard that many people think it was a bad idea. In the UK, a lot of people think it was good idea, going so far as to vote for it (or governments that support it) multiple times. But what will actually change?

Let’s talk about one thing that may change: trade. Let’s talk about tariffs, Brexit, and … oranges?

First: What is a tariff? It is a tax paid on imports. For example, if you wanted to buy something from another country that cost $10 and there was a 16% tariff, then you would have to pay $11.60.

Why do countries place tariffs? One big reason is to protect domestic producers. If it costs less to buy from foreign countries, then you’ll buy from them. Tariffs increase the price of these foreign products, shifting consumption towards domestic producers.

(Another big reason for tariffs is to retaliate against another country… sometimes at the harm of your own country. See this post on trade wars.)

How do oranges play into this? Well, the European Union (EU) is a customs union, which means that there are no internal tariffs among EU countries. Thus, within the EU, countries can buy oranges from the main European producers of oranges (Spain, Italy, and Greece) without having to pay a tariff. However, if they want to buy from outside of Europe, they have to pay a tariff.

Currently, that tariff-free trade applies to the UK as well. If British importers can buy oranges from Spain (no tariff because of the customs union in the EU) for cheaper than they can from South Africa (with a tariff), then they’ll buy from Spain. The EU has set up these tariffs to protect producers within the EU. Further, these European orange producers will be able to sell their oranges at a higher price than if they were competing with oranges from other countries. Win-win for the European orange producers. The UK orange consumers? Well, they’re going to have to pay higher prices for oranges than they may otherwise have wanted.

A fun thing about orange tariffs in the EU is that they actually vary by the time of the year. Orange season in European Mediterranean countries is from October to May. During this time, tariffs are can be as high as 16%! During off season when Europeans still want to buy oranges but they can’t get fresh oranges from within the EU, tariffs are lower. For example, between June 1stand the 15th of October, tariffs are capped at 3.2%. They’ve done this to protect European orange farmers during peak season, but to allow Europeans to get cheaper oranges when they aren’t in season in the Mediterranean.

How does this all apply to Brexit? In 2016, the British people voted to leave the European Union, and after much political debating, they formally left the union on January 31, 2020 (although they are in a transition period that keeps them within the customs union through the end of 2020). They are currently negotiating to figure out what a future trade deal will look like. At the same time, the UK will also need to consider potential new trade agreements with other countries. So what happens to oranges? There are two main scenarios:

Scenario 1: The UK gets rid of (or reduces) the tariffs on oranges from other, Non-European, countries. Why would they do this? Well, without the tariff, they may be able to get oranges for cheaper from another country. Let’s go back to the $10 example. Instead of having to pay $11.60 for oranges from South Africa, they could pay $10 under no tariffs (or somewhere in between with lower tariffs). During some seasons, it’s possible that the cheapest place to import oranges from would still be from Southern Europe. However, they might be able to get them for cheaper from other countries – South Africa, Morocco, Egypt….

Why would the UK do this? Because they want cheaper oranges.

Within this scenario, the EU might even enter into a free trade agreement with the US, such that oranges from Florida or California get into the UK with no tariffs—preferential treatment if the UK still charges tariffs on oranges from the rest of the world. The U.S. producers would like this: more exports of oranges. The UK consumers also may like this if the quality is just as good and the price is lower.

Scenario 2: The UK and EU might make a deal such that (among other things) the UK has to maintain import tariffs on non-EU oranges and the UK continues to enjoy not having to pay tariffs on oranges. The EU may insist on this to help protect the European orange farmers, and to keep the UK from importing oranges from other countries at low or no tariffs and then selling them to other European countries. What would the result of this be? European orange farmers will continue to sell oranges to the UK at higher prices than the otherwise would be able to without the tariffs. The UK will buy European oranges, which may or may not be higher quality than other countries.

What’s the best solution? It depends on who you ask. If you ask the European orange farms, scenario 2! They continue to be protected by the European orange import tariffs, and the UK will be more likely to buy oranges from them. If you ask the South African, Egyptian, US, etc. orange farmers, then they’d prefer Scenario 1. With lower import tariffs into the UK, they have a whole new population buying from them (increased demand). The British consumers? Well consumers care about price and quality. From a price perspective, they’d prefer Scenario 1 where they can get cheaper oranges. From a quality perspective, I can’t really tell you…

*** Big thanks to Tim Meyer for his help on this post.

Orange Scones

Britain is known for it's high-class afternoon teas, which often include scones. I adapted this recipe from the Pioneer Woman's Cinnamon Chip Scone recipe to make an orange scone. Depending on how much orange flavor you want, you can adjust the amount of orange zest in the scone batter, or even add it to the icing you drizzle on top.

Scone:

3 cups flour

1/3 cup sugar

5 tsp. Baking Powder (yes, 5)

1 to 2 tsp. orange zest

1 cup (2 sticks) COLD unsalted butter

3/4 cups cream (or half and half, if that's what you have)

1 egg

Icing:

2 cups powdered sugar

1/4 cup melted butter

1/4 cup orange juice (freshly squeezed or not)

1 tsp. orange zest

Pinch of salt

Directions:

Preheat oven to 350 degrees.

Stir together with a fork the flour, sugar, baking powder, and orange zest. Once combined, cut in the butter. Make sure butter does not get too small, you want to leave larger clumps of butter (flatten them with your fingers) to create flakiness in the scone.

In a small bowl, gently whisk the egg and add the cream. Gently combine into the flour mixture using the fork or your hands until the dough forms into a ball.

Line a baking sheet with parchment paper. Gently flatten the dough onto the pan (should still be pretty thick) and cut into desired shapes (squares or triangles are traditional). Separate the pieces from each other so that they will cook through. At this point you could freeze the dough until ready to bake.

Bake for 20-25 minutes (on the longer side if you froze them).

In the meantime, whisk together the ingredients for the icing in a bowl. It's best if you whisk the powdered sugar on it's own first to break up large clumps. Then add the butter, orange juice, salt, and zest. Add another Tbsp. of orange juice if the icing is too thick.

When scones are done, pour the icing onto the scone you want to eat. If you are not going to eat them immediately (although scones are best the day of), wait until they have cooled before you add the icing.

Enjoy!