Is the President of the European Council going to wave his magic wand and turn all those ships into pumpkins?
That's not what would happen. What would happen is that the current trade going on would just continue, i.e., some of it, so that there would still be trading between Britain and some EU members (maybe not all). This might be "free trade" or at least with low tariffs, maybe just continuing the present levels, with individual EU states. It would not be "free trade" between the EU and Britain.
There's no way to predict how "free" the trade would be, or the tariff levels, but there's no reason all this trade has to stop. Both Britain and those EU states want to continue that trade, which is mutually beneficial and profitable to the companies, who want it to continue. So with everyone wanting it to continue, much of it likely would continue, with some arrangements improvised for setting the terms, which need not be difficult as long as everyone wants this trading to continue. They'll decide those terms somehow, and it might be close to "free trade," or at least easy terms to enable the business to keep happening. Since no one has any incentive to put an end to this trade, why should it end?
This doesn't mean the EU would "have free trade with Britain." It wouldn't mean any "free trade agreement" between the EU and Britain. Britain can trade with certain EU nations without meaning there's an official agreement with the EU allowing it, or even a "free trade deal" between Britain and those EU nations. Rather, some adjustments would take place to allow the trading to continue. Something more formal might emerge later, but the trade taking place now is so critical that it makes no sense for all of it to suddenly be terminated, resulting in billions of dollars of economic losses to so many.
What would be the point of having all that trade suddenly suppressed? The EU and Britain could avoid this dilemma by settling on a new trade deal, but if they don't, why shouldn't some or most of that trade continue anyway? What is the rationale to saying it has to stop, when all they have to do is just continue on with the business they're doing now? What makes all that trading stop, when everyone wants it to continue?
"third parties" meaning non-EU nations? You mean imports from outside Europe would then pass into EU member states via Britain?
Let's assume there'd be some of that. There's already much trading which isn't supposed to happen, under the rules of any trading bloc or agreement.
Trade is already made very complicated by the numerous obstacles, allowing products from country A but not country B, or requiring 33% domestic content -- or 41% or 53½%, etc., and other goofy rules from the bone-headed protectionists which make it difficult to determine what is allowed and what is not, and yet a process develops to allow the products through, with difficulty in some cases. This goofiness of the protectionist requirements does not mean the trade is all ended.
Maybe a procedure emerges for weeding out the "passthrough" imports, and maybe some of them slip through -- there are imperfections at customs trying to enforce this or that ban on something that threatens the jobs of this or that industry. The whole thing is so depraved and wasteful and destructive for consumers -- and yet there's no reason to say that all the trading has to stop because the rules cause a mess and are not uniformly enforced, and some jobs are threatened here and there because of a loophole, like "passthrough" imports. Maybe procedures are followed which would mostly prevent them.
That certain products from Britain to an EU country would continue to be shipped does not mean that this EU member would be opening its market to everything from Britain. Rather, the imports received would be limited to only the particular ones being traded now and which are desired to be continued, by both countries.
That there would be some complications from the resumed trade does not mean that all the trading now has to be stopped, because of Brexit. Whether it's "passthrough" imports or other details to be straightened out, which might be numerous, it does not follow that the billions of Euros/pounds in business has to suddenly stop. The rules are never perfectly followed or enforced, in anything to do with crossing borders. Minor nuisance issues like "passthrough" imports can be taken care of, or maybe never ideally fixed, but it's not important enough to annihilate all the current trading which millions depend on.
Such issues will cause some disruption, or adjustment in the current activity, but to say this has to put an end to all trade between Britain and those nations doesn't make sense. Why does all this trade have to suddenly come to a screeching halt? Who is going to step in and suppress this trading? Who is going to sink the ships going to Britain? How is the EU Navy going to impose its Continental Blockade of Britain? Why would it try?
Some of that trade would continue, because all the parties want it to continue and would do what's necessary to keep that business going. It makes no sense for them to say "Britain's no longer in the EU, so therefore we can't allow any imports from Britain like before." Why do they have to say that? If they want those imports, nothing stops them from accepting them and deciding on the terms.
Brexit would cause some disruption in the trading, but not put an end to all trading between Britain and EU nations, including Britain-to-EU exports. There's no reason why all that trading has to stop just because of Brexit. Why does it have to stop? If everyone wants it to continue, what forces it to stop? That there are new difficulties, new obstacles, would cause a decrease in the trading, but not a complete ending of it.
You can't be inside a tariff union without also having unified tariffs (and trade deals) with outsiders.
Britain currently does have the same tariffs (and trade deals) with the outsiders. After Brexit some of that could continue, so the terms with the outsiders would remain the same. If there's NO BREXIT DEAL, that includes no change in the terms with the outsiders. So the DEFAULT action for Britain would be to leave the current terms/tariffs in place.
Changes would eventually come, but the immediate steps would be to leave the current terms in place until some new trade deal is finally agreed to. So at first there'd be no problem with "unified tariffs (and trade deals) with outsiders."
Norway is an example of a non-EU state that has free trade with EU at the expense of not being able to have its own trade deals. But the UK doesn't want to be Norway.
Its new arrangement might become similar to Norway. Britain would make whatever adjustments are necessary in order to allow the current trading to continue.
The bottom line is simple: There is currently much trade going on between Britain and EU nations, and it makes no sense to say that all this trade has to suddenly be stopped after Brexit. What is the point of stopping something beneficial to everyone and harmful to no one? Who is going to say "OK, stop it! This all has to end, even though everyone wants it to continue. Stop it or I'll shoot!"
How does that make sense? How can anyone arbitrarily step in and put a stop to something which is benefiting millions of buyers and sellers and consumers, when it would be very simple to let it continue as it is going now? What is the critical need to put a stop to all this trading? How is the world going to end if the trading continues? Who will be harmed if it continues?
Obviously the only harm comes if the trading is stopped, not if it just continues as it's going now.
No one is answering why it has to stop, or who is going to stop it.