Brexit Impacts: Opportunities for German-Irish Trade

While there is still uncertainty whether and how the UK will leave the EU, a hard or no-deal Brexit is still a possibility. Under such a scenario the EU will impose most favoured nation tariffs on imports from the UK, which will impact on import prices. This will change the relative attractiveness of imports from other EU countries compared to that for imports from the UK. This means that sourcing from alternative markets. This paper considers imports from the UK to Germany and Ireland and the degree to which these can be replaced by Irish or German goods respectively. The analysis uses detailed 6 digit trade data for 2017 in conjunction with the EU-WTO tariffs, which are assumed to be passed through perfectly. The impact of additional transport costs given the longer transport distance is accounted for. The results suggest that there are significant opportunities for trade reorientation with potential in over half of the all the six digit product groups that are currently imported from the UK