If the EU27 and United Kingdom reverted to a World Trade Organisation trading relationship with each other, direct costs will total around £31 billion for EU exporters and around £27 billion for U.K. exporters, even after initial steps to mitigate costs have been taken. Non-tariff barriers will account for more of the effect than tariffs.

That’s according to the findings of a recent report, “The Red Tape Cost of Brexit,” conducted by management consulting firm Oliver Wyman and law firm Clifford Chance, which partnered to calculate the impact of tariffs and non-tariff barriers on companies. The report focused only on the direct impacts of the U.K.’s exit from the EU, which are of immediate importance to companies for Brexit planning. It did not model additional impacts—such as migration, pricing changes, or third country Free Trade Agreements—which are likely to increase the overall impact, Oliver Wyman stated.

In the EU27, the hardest hit sector will be automotive, where the direct impact will be around 2 percent of current Gross Value Added (GVA). Country level differences will vary considerably, with Ireland’s agricultural sector’s exposure to U.K. consumers, for example, particularly a pinch point.

In Germany, four of the sixteen states—Bavaria, North Rhine-Westphalia, Baden-Wuerttemberg, and Lower Saxony—will shoulder around 70 percent of the country’s direct impacts, as a result of exports to the United Kingdom that arise from their leading global positions in automotive and manufacturing.

In the United Kingdom, the financial services sector will take by far the biggest hit, incurring around a third of the extra ‘red-tape’ costs, according to Oliver Wyman. However, there are very significant impacts in other sectors where firms are highly integrated into European supply chains—for example, in the automotive, aerospace, chemicals and metals, and mining sectors.

“There will be both winners and losers from Brexit,” said Kumar Iyer, a partner at Oliver Wyman. “To navigate the uncertainty, companies should be thinking about impacts under different scenarios both operationally and strategically. We see the best prepared firms taking hedges now based on the direct impacts on themselves, their supply chains, customers and competitors. Unfortunately, we see that small firms are least able to take these steps at present.”

The impact assessment also revealed that the ability to mitigate the impacts of post-Brexit trade barriers will vary by sector and company size. Before designing their response, Oliver Wyman suggested that firms think through the impact on different levels: operations, supply chains, customers and competitors.

Small firms will find this particularly challenging, especially where they have no non-EU trade experience and may be rendered uncompetitive as they seek to make the changes needed. Automotive and aerospace industries will be able to localise supply chains and take advantage of domestic suppliers in some areas but with the loss of “passporting” financial services will require relevant front and back-office staff to relocate to the EU.

However, even within each industry, individual impacts and the appropriate response are highly variable. The differences will depend on things like the mix of goods and services the business sells, where it is based, the location of its customers, and the complexity of its supply chain.

“Failing to prepare is preparing to fail,” said Jessica Gladstone, a partner at Clifford Chance. “Given the difficulty of knowing exactly what turbulence lies ahead many businesses are putting Brexit in the ‘too hard’ box. However, exporters that understand exactly what Brexit’s risks and rewards could be for them will be able to implement the right plans at the right time to ensure that they are one of the winners rather than one of the losers.”

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