In a production-possibilities/indifference curve diagram depicting the movement of a Country from a situation of a uniform tariff against all trading partners to a situation of a Customs union with one trading partner,

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When a country shifts from a situation of a uniform tariff against all trading partners to a customs union with one trading partner, it will typically eliminate tariffs with that specific partner while maintaining tariffs with all other partners. This will lead to an increase in trade between the customs union partners, resulting in an increase in the production of the export good in the home country and a decrease in the production of the import good. Therefore, the home production of the country's export good will increase and home production of the country's import good will decrease after the formation of the customs union. This shift will lead to a movement to a new production-possibilities/indifference curve, which may be higher, lower or the same depending on other factors affecting the economy.

In a Production-Possibilities/indifference Curve Diagram Depicting the Movement of a Country