[quote Havanananana]@LastTrainEast
So consider some French company that buys ..bolts from us. They still need the bolts and their government wants them to get them so that they don't go under
Great example.
The French company currently buys bolts from a UK supplier. They can place an order on Monday afternoon, and because their is no customs paperwork to complete, no border checks and a free flow of goods across the Channel and no tariff paperwork, the bolts can be delivered next day. Let's say that the pallet of bolts costs the UK supplier £500 to make and deliver, for which it charges £700, making a £200 profit.
After January 1st, the French company wants to buy more bolts and wants guaranteed next-day delivery. They phone the UK supplier.
The UK supplier now needs to register as an exporter, needs to complete a customs declaration (costing £75), pay someone in-house to do the paperwork (say £25 per shipment) that they didn't do before. Then they need to pay the logistics company, whose costs have also increased by £50 a pallet to cover additional paperwork and the cost of delays at the ports and the cost of the truck returning empty as they can no longer pick up goods in the EU. The additional costs are therefore £150. If the UK company charges the old price of £700 per pallet, they make £50 profit instead of £200.
It gets worse. The £700 per pallet price must now include tariffs. To keep the maths simple, lets say approx. 20% of the £650 - so approx.£130. If the UK supplier attempts to absorb the cost, they now make a loss of (£50 - £130) = £80 loss per consignment. The UK supplier is bankrupt in a matter of weeks.
If the UK supplier asks the French importer to absorb the cost, the bolts now cost the importer £700 + £140 = £840. The importer also has to complete the additional importing paperwork that was not needed before - which costs money - and due to delays at the ports there is no guarantee of delivery times.
The importer says thanks but no thanks, wishes the UK manufacturer 'bon chance' and buys his bolts from a supplier in Germany, Spain, Poland or anywhere else in the EU, with no customs paperwork, no tariffs and no delays. Even if he has to pay 10% more than before (£770 instead of £700) this is still far cheaper than the UK supplier's new price.[/quote]
I said it ‘in a nutshell’ waaaaay back - havananana sets it out very clearly here