Quantifying Non-Tariff Barriers: Brexit, Input Sourcing and Firm Performance

Gustaf Dillner, Rebecca Freeman, Kalina Manova and Thomas Sampson

No 21997, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: How successful is European integration in removing non-tariff trade barriers? We study how Brexit affected UK firms' input sourcing and sales. The post-Brexit Trade and Cooperation Agreement (TCA) reduced sales and input expenditure at firms with higher pre-Brexit EU trade exposure. It also caused firms to switch towards domestic and non-EU inputs. Through the lens of a trade model, the switch in input sourcing implies the TCA increased trade costs on EU imports by 21% and raised unit production costs by 3.1% for the average UK importer. Our results indicate EU membership secures large reductions in trade costs.

Keywords: Trade policy; Non-tariff barriers; Brexit (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2026-09
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