A hard Brexit would mean that UK car exports to the EU would face a 10% tariff. In today’s car market with very tight margins that is a big deal. But it gets more complicated than that. If there is a free trade agreement between the UK and the EU that would remove tariffs one of the conditions would be that the car actually come from the UK. In other words, the cars would have to have a UK origin. It appears that only 41% of the parts that make up cars originate in the UK with much of the rest coming from the Continent. To get around these percentages the UK will have to have special rules on the origin of cars in the agreement.

This is just one product and designing rules of origin for cars will be complex. There are about 40,000 goods being traded between the UK and the EU. If a deal needs to be done on each one then the negotiations will not be completed in the short term.