The EU has demanded Boris Johnson drop plans to turn the City into a 'Singapore on Thames' global economic powerhouse before it will consider helping unclog the huge backlog of goods at UK ports.
The EU is said to be open to discussing how to reduce friction, with shopper complaining of shortages at UK supermarkets of staples like broccoli, tomatoes and cheese as post-Brexit red tape has hit supply coming into the country.
Shortages have also been reported in French supermarkets as UK exports have suffered due to tailbacks.
But EU diplomats have suggested that will only happen if Boris Johnson keeps the UK close to rules made in Brussels and ditches any plans to emulate the growth of the Asian trade powerhouse on its doorstep.
Singapore is a low tax economy and shipping fulcrum in Asia and ministers are believed to see its model as a way to reshape the UK after Brexit.
A senior European diplomat told the Times that 'of course we can in future discuss how to have less friction', but they added: 'Discussing further facilitation or ways to reduce friction would depend on what the UK is doing and where they want to go.
'Initiating that conversation and negotiation will not be made easier if the other side of the table is talking up deregulation or Singapore on the Thames.'
It came as it emerged Transport Secretary Grant Shapps has 'engaged' with the Ministry of Defence to put troops on standby to step in to ease congestion.
Lorry drivers have reportedly been warned that tailbacks at ports could get worse in the coming days as traffic returns to normal levels
Ministers have admitted that post-Brexit rules are partly to blame for empty shelves in Northern Ireland supermarkets
Mr Shapps said in a letter to the transport and international trade select committees that the Army will get involved 'should the situation at ports reach a sufficiently critical level and a clear role for military support emerge'.
It came amid reports that the Cabinet Office has told haulage firms to prepare for a further squeeze at ports and as Liz Truss admitted that Brexit is partly to blame for food shortages in Northern Ireland.
The Times said the Cabinet Office has informed lorry drivers that they could face further disruption in the coming days as traffic increases.
Government modelling apparently shows freight numbers are set to return to normal levels after a post-Brexit dip.
There are fears that if drivers arrive at the Port of Dover with the wrong paperwork tailbacks and delays will worsen.
Shoppers in the UK have reported shortages of some items in domestic supermarkets after Britain split from Brussels at the start of the year.
Items seemingly in short supply have included cauliflower packs, citrus fruit, courgettes, French wine and brie.
Meanwhile, M&S stores in France have faced supply issues and millions of pounds worth of meat exports from the UK have been left to rot in ports on the continent because of new border rules.
Northern Ireland has also experienced food shortages but ministers have previously been insistent problems were not Brexit-related.
Northern Ireland Minister Brandon Lewis said empty shelves had 'nothing to do with leaving the EU' as he blamed the coronavirus crisis.
But Ms Truss, the International Trade Secretary, has now said Brexit is partly to blame, putting her at odds with her Cabinet colleague.
She told ITV's Peston programme: 'Well, I think it is down to both of those issues. Of course we were always clear that we are leaving the single market, we are leaving the customs unions, there would be processes to be undertaken.
'We are now seeing a more rapid flow of goods into Northern Ireland and those supermarket shelves are being stocked.
'Of course there was always going to be a period of adjustment for businesses but at the same time the benefits of having the trade deal we now have with the EU is we are able to strike trade deals with the rest of the world.'
He told the same programme: 'I don't think it is only to do with Covid-19 although certainly that doesn't help but the supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that is clearly a Brexit issue.
'It is part of the reality of the United Kingdom now being outside not only the European Union but of the customs union and the single market as well.
'What we have in place in Northern Ireland is a protocol which effectively de-facto creates an extension of the EU's single market for goods into Northern Ireland even though Northern Ireland as part of the United Kingdom is outside of the EU.
Liz Truss, the International Trade Secretary, said problems in Northern Ireland were 'down to both' Brexit and coronavirus
'That requires a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption that I think companies will take some time to get used to and that is what we are seeing at the moment, some companies simply weren't ready for the change that Brexit brings, it is a very real change.'
Mr Lewis said earlier this week that shortages of some products in the weeks since the post-Brexit transition period ended on December 31 were due to the knock-on effects of UK trade with continental Europe being temporarily halted due to concerns over the new Kent variant of coronavirus.
He told BBC Radio 4's Today programme: 'That's actually something we've seen across other parts of the UK as well, nothing to do with leaving the EU, nothing to do with the Northern Irish protocol but actually to do with some of the challenges we saw with Covid at the port of Dover just before Christmas and the impact that had on supply lines coming through.
'I have to say supermarket supply lines at the moment are in good fettle.'
The Northern Ireland Protocol between the UK and the EU requires health certifications on animal-based food products entering Northern Ireland from the rest of the UK.
A Whitehall source added: 'Brandon has been clear that it is important to put these issues in context. There were multiple challenges for businesses trading across the UK, including Northern Ireland, over Christmas and into the New Year.
'That wasn't unique to Northern Ireland and was unrelated to the Protocol. Those challenges included staff shortages due to coronavirus, NI being at the end of the supply chain and the issues we saw at Dover before Christmas.
'This was compounded by a period of adjustment as businesses adapted to new processes for trade from GB to NI. The flow of goods under the Protocol is now smooth overall and individual issues are being addressed quickly by relevant departments.'