Post-Brexit trade barriers
The TCA’s main impact on goods has been to erect significant trade barriers between the UK and the EU, its largest trade partner.
When the UK left the EU Customs Union and the Single Market on 31 December 2020, it lost the benefits of near frictionless, tariff-free, quota-free trade within the EU that all EU members enjoy.
The EU-UK Trade and Cooperation Agreement (TCA) eliminates most tariffs and quotas but erects non-tariff barriers (NTBs), such as regulations or testing procedures, barriers to the movement of people providing services, restrictive rules of origin and infringement of intellectual property rights.
Modern trade often takes place through a complex global network of goods and services producers, who work together to create the final package for the end user or consumer. Trade barriers that affect one part of the process may have knock-on effects far beyond their immediate impact.
The example of automotive sector (below) shows how goods and services trade inter-relates in complex supply chains.
Against these barriers, the benefits of the TCA include that it:
- eliminates tariffs and quotas for qualifying goods (including agriculture and fisheries);
- however, tariffs and quotas now apply to non-qualifying goods.
- permits UK to negotiate trade deals with non-EU countries;
- allows UK to negotiate to participate in EU programmes, such as Erasmus and Horizon;
- creates a special customs arrangement for Northern Ireland.
Exports to the EU
All exports from the UK to the EU are subject to customs formalities and must comply with import rules:
- Must meet all EU standards; and,
- Must undergo regulatory checks and controls for safety, health and other public policy purposes.
For goods exports to the EU, the new barriers include facing the full suite of the EU’s standard customs procedures:
- customs declarations;
- safety and security certificates;
- evidence of origin of goods and inputs into the manufacture of goods;
- import VAT requirements;
- export health certificates for certain food and plant origin products;
- requirements under the EU’s REACH system (the Registration, Evaluation, Authorisation and Restriction of Chemicals).
Under the TCA, neither party formally regards checks on goods by the other party as adequate. Although the EU has mutual recognition agreements with other countries, they do not feature in the TCA. These would avoid double testing of a product by the UK and the EU in sectors such as pharmaceuticals, machinery and toys.
Similarly, veterinary equivalence does not appear in the TCA. So, the TCA does not reduce or eliminate inspections on food products, which account for many of the checks on imports at entry. However, the EU has several such agreements with other non-EU countries, for example, Canada and New Zealand, which greatly reduce inspections.
For examples, see Table 5.6.
Imports to the UK
The UK Government has been phasing in border controls for goods imported from the EU since 2021. Customs declarations are now required for all goods imported into Great Britain. However, the introduction of full customs checks has been postponed several times.
The Border Target Operating Model (BTOM), first published in August 2023, outlines the UK’s new risk-based approach to imports of live animals, products of animal origin, plants and plant products from all countries, including the EU. The BTOM proposed a phased introduction of the remaining controls.
| Table 5.6: Examples of impacts of TCA on goods trade | |||
|---|---|---|---|
| New barriers – examples | Effects – examples | ||
| Goods – exports to EU | Customs declarations (275 million up from 55 million – cost ~£15 billion) | Loss of VAT refunds (e.g. Burberry) | Extra costs |
| Rules of origin procedures (cost ~£6 billion) | Data protection issues | Higher prices | |
| Tariffs on non-qualifying goods | Regulatory conformity testing (often in EU) | Border delays | |
| Sanitary and Phytosanitary (SPS) checks on agri-food | Supply chain disruption | ||
| Goods – imports from EU | UK customs declarations for all goods imports were phased over 2021 and 2022 | UK tax authorities require complicated documents | Reduced attractiveness of UK market |
| Additional UK import checks (eg SPS) on agri-food are due in early 2024, after being postponed five times | Lack of readiness by EU traders | Smaller EU exporters ignore UK |
|
| Safety and security checks will apply from late 2024 | Reduced choice for UK producers and consumers | ||
Business responsibilities for customs
The main customs responsibilities of businesses in relation to goods are:
- Make customs declarations on all goods exported from and imported into the UK (rules differ for moving goods in and out of Northern Ireland).
- Check which special rules of licensing or certification apply to goods such as agrifoods or chemicals.
- Classify goods and record their origin. Incorrect commodity codes or inaccurate recording of origin in customs declarations may lead to incorrect amounts of tax or duty being charged.
- HMRC has published further information ̶UK for claiming a reduced rate of Customs Duty for trade between the UK and EU: Proving originating status and claiming a reduced rate of Customs Duty for trade between the UK and EU.
- Importers can check the applicable UK tariff duties and VAT rates using the HMRC Trade Tariff tool.
- Follow the EU and UK requirements on safety and security declarations.
- On 31 January 2025, the UK introduced entry summary declarations for EU imports. Exports to the EU require an exit summary declaration.
Source: House of Commons Library, Customs rules for trade with the EU, July 2025
Rules of origin (RoO)
Rules on the origin determine which goods and inputs to processing qualify for zero-tariff treatment. Usually, goods must contain a specific percentage of originating material from either the UK and/or the EU. Goods which do not contain enough ‘local’ content do not qualify for zero-tariff treatment, neither do goods which have not been sufficiently processed or made in the UK.
These rules are product-specific, and compliance can be onerous. This means, for example, that:
- goods imports from the rest of the world cannot be re-exported tariff-free to the EU, without sufficient processing:
- so, movements of non-originating goods have to be carefully managed to avoid tariffs on re-export to the EU.
- goods imports from the EU, cannot be distributed tariff-free back into the EU, without sufficient processing;
- some exporters, particularly smaller companies, prefer to pay the tariff to avoid the burden of compliance;
- some larger firms have had to set up distribution networks in the EU, for EU-originating goods:
- for example, UK companies have formed commercial entities and registered for VAT in both the Netherlands and Germany, to comply fully with relevant commercial and VAT rules.
There is an important wrinkle in RoO that is causing serious problems in food supply chains. Goods that arrive in the UK zero tariff from the EU but are not altered in any way and re-exported to the EU do not count as UK-origin. As a result, they face the full EU Common External Tariff on returning to the EU. Food and agricultural products attract some of the highest tariffs. This is emerging as a major issue for goods shipped to GB distribution hubs. They attract full EU import tariffs when they return to the EU and, as a result, suppliers are being forced to cancel the delivery of products to EU customers.
Automotive sector – RoO example
There are about 30,000 components in a modern petrol-engine car (according to Toyota), coming from many suppliers and typically combined with embedded services, such as satellite navigation systems, and direct additional sales of services, such as maintenance and financing.
Car manufacture is a highly competitive sector that has long used just-in-time manufacturing techniques. The TCA makes UK manufacture less competitive by creating costs and delays in UK-EU trade, even if trade is tariff-free:
- customs declarations
- certification costs
- audits to prove that RoO requirements are met
- border delays disrupting just-in-time systems etc.
Car exports to the EU avoid tariffs if they have at least 55% local content, i.e., materials coming from the UK and the EU:
- there is full bilateral cumulation – UK and EU components count equally as local content.
- however, the TCA does not allow ‘diagonal cumulation’ with third countries like Japan, China and Turkey.
Industry experts say this should allow most UK car makers to avoid tariffs on exports to the EU, unless they import high value components from outside the EU (and reduce the local content %). For electric cars, the 55% is being phased in over six years from 40% in 2021. This may be challenging if high-value parts, such as batteries for electric vehicles, are imported from outside the EU.