U.S.-EU Tariff War: What’s at Stake for Northern Ireland?

Navigating Northern Ireland's customs in a US-EU trade war: learn to manage risks and seize opportunities for local businesses.

Key Questions Covered in This Blog:

• How will a US-EU trade war affect Northern Ireland’s position in the global supply chain?

• What role does the Windsor Framework play in safeguarding Northern Ireland’s trade interests?

• How can businesses in Northern Ireland prepare for potential tariffs and shifting customs rules?

  
  

Introduction

From 12 March 2025, the US will impose a 25% tariff on all steel and aluminium imports, marking the end of previous agreements that allowed EU and UK steel and aluminium exports to enter the US market tariff-free.

While details remain uncertain, it appears that tariffs will continue to be a key element of the Trump administration’s approach to trade perceived as unfair. Additional US tariffs on EU and UK goods may follow.

For businesses trading between Great Britain and Northern Ireland, understanding the potential impacts of a US-EU trade war is crucial.

"Northern Ireland’s unique position between the EU and UK customs regimes offers both opportunities and challenges. How businesses prepare for a potential trade war will determine their resilience in this complex system.", Managing Director Customs Manager Ltd.

Abbreviations Used:

• Windsor Framework: A protocol outlining the arrangements for Northern Ireland’s relationship with the EU post-Brexit.

• EU Tariffs: Tariffs imposed by the European Union on goods imported into the EU.

• UK Tariffs: Tariffs imposed by the UK on goods imported into Great Britain.

How might the EU respond to further US tariffs?

President Trump’s ‘Fair and Reciprocal Plan,’ which aims to reduce the US trade deficit and make trade more balanced, is expected to introduce further tariffs on a wide range of goods in early April. The EU currently runs a trade surplus in goods with the US, and Trump has suggested that all EU goods could face a 25% tariff.

The EU has made it clear that it will not tolerate unjustified tariffs, with European Commission President Ursula von der Leyen stating, “Unjustified tariffs on the EU will not go unanswered – they will trigger firm and proportionate countermeasures.” Retaliatory tariffs are a likely response, with goods strategically targeted to make a strong political statement. In 2018, during a similar trade dispute, the EU imposed tariffs on iconic US products such as Harley-Davidson motorcycles, Levi jeans, and Bourbon whiskey. These tariffs were suspended in 2022 following an agreement with the US to restore tariff-free access for EU steel and aluminium exports up to a set quota. A similar deal was reached between the UK and the US.

The EU’s suspension of tariffs ends on 31 March 2025. Unless the EU extends this suspension, the 2018 tariffs on US goods will automatically be reinstated on 1 April 2025.

If the US targets additional EU goods under the ‘Fair and Reciprocal Plan,’ the EU could introduce further tariffs. However, this process will take time, as the EU must follow established legal procedures for implementing trade defence measures.

How might the UK respond to further US tariffs?

The UK government has said that they will not immeidately retalliate againstpotential US tariffs. The UK aims to establish a new economic agreement with the US to prevent tariffs, supported by US trade data indicating a UK trade deficit with the US. However, negotiating such an agreement will be difficult due to discrepancies between UK and US trade data. The UK's data suggests an overall trade surplus in goods with the US, though it is smaller than the EU's surplus.

The Prime Minister has expressed a wish to maintain balanced relationships with both the US and the EU, stating, “We will never choose between either side of the Atlantic.” Consequently, the UK might be reluctant to follow the EU if it enacts retaliatory tariffs on the US, particularly while negotiations for a potential deal with the US are ongoing.

Current customs arrangements in Northern Ireland

According to the Windsor Framework, products made in Northern Ireland can freely access both the EU single market and, with a few exceptions, the UK internal market.

Nonetheless, goods arriving in Northern Ireland from outside the EU (including from other UK regions) are considered ‘at risk’ of entering the EU single market.

If EU tariffs exceed UK tariffs, these ‘at risk’ goods will incur the EU tariff. Exceptions exist for traders in the UK Internal Market Scheme who meet conditions ensuring their goods are used or consumed solely in Northern Ireland. In such cases, UK tariffs are applied.

What would US tariffs on EU goods mean for Northern Ireland exports to the US?

Goods exported from Northern Ireland to the US are unlikely to be directly impacted by tariffs imposed only on EU goods.

As part of the UK’s customs territory, goods produced in Northern Ireland are typically treated as UK goods when exported outside the EU, meaning they would be subject to any US tariffs on UK goods.

However, US customs authorities may increase border checks if they suspect EU-origin goods are being routed through Northern Ireland to avoid higher tariffs on EU goods. This could lead to delays, uncertainty, and additional administrative burdens for legitimate Northern Ireland exporters.

What would retaliatory EU tariffs on US goods mean for Northern Ireland?

Under the Windsor Framework, all goods subject to EU retaliatory tariffs that enter Northern Ireland from outside the EU (including from another part of the UK) are considered ‘at risk’ of entering the EU single market. This includes goods moved under the UK’s Internal Market Scheme.

If the EU tariff is higher than the equivalent UK tariff, the EU tariff will apply. Businesses in Northern Ireland can recover the tariff paid on goods that do not enter the EU. However, they will need to weigh the costs of making a claim under the UK’s Duty Reimbursement Scheme against the amount they can recover. In many cases, these additional costs may be passed on to consumers in Northern Ireland.

The key here is compliance.

Your customs declarations and paperwork must clearly indicate the goods' final destination. This meticulous documentation helps ensure that your goods are treated as “UK goods” for tariff purposes, thereby avoiding unnecessary EU tariff costs.

Tip for businesses: Maintain detailed records of your shipments, including destination declarations and any proof that goods are intended for the UK market only. This is the best way to protect your bottom line and stay in compliance.

How Might Retaliatory EU Tariffs Impact Northern Ireland?

If the EU retaliates with tariffs on US products, Northern Ireland businesses might see an increase in the cost of imports from the US. However, there’s an opportunity for businesses to avoid these higher tariffs.

Goods imported from the US into Northern Ireland that are clearly destined for the UK market (and not the EU) may not be subject to EU tariffs. Proper documentation and customs declarations will be crucial to ensure that goods don’t become "at risk" of entering the EU, and businesses can avoid unnecessary costs.

What Role Does the Windsor Framework Play in Protecting Northern Ireland?

The Windsor Framework plays a pivotal role in Northern Ireland’s trade relations, particularly during a US-EU trade war. By allowing free movement of goods between Northern Ireland and the EU, businesses can still operate smoothly across the Irish border without facing the customs checks that would otherwise apply to goods moving between the UK and EU. However, this doesn’t come without complexities.

When goods enter Northern Ireland from outside the EU (such as from the US), they are considered "at risk" of entering the EU market, which could trigger the imposition of higher EU tariffs. Yet, businesses in Northern Ireland can work to prove that these goods will remain in the UK market and avoid EU tariffs. This underscores the importance of thorough customs declarations and ensuring compliance with both EU and UK regulations.

What this means for businesses: The Windsor Framework provides an invaluable opportunity for Northern Ireland businesses to access both markets. But this comes with an important responsibility to manage customs declarations accurately. Being proactive in understanding where your goods are going and preparing proper documentation can help shield you from costly tariffs.

How Could a UK-US Trade Deal Affect Northern Ireland?

Looking ahead, a UK-US trade deal could further complicate matters for Northern Ireland businesses. If the UK negotiates lower tariffs on imports from the US, Northern Ireland may find itself caught in the middle—facing higher EU tariffs on US imports, while benefiting from lower UK tariffs. This could create an even more complex tariff structure for businesses in Northern Ireland, necessitating more careful planning and strategy.

Northern Ireland businesses should consider how they can balance their trade operations between the UK and the EU, taking advantage of lower tariffs where possible, but also preparing for potential disruptions.

Key takeaway: If a UK-US trade deal emerges, Northern Ireland may face a unique situation, benefiting from lower UK tariffs on US goods but encountering higher EU tariffs. Proper planning and accurate customs procedures will be essential to navigating this complexity.

Arne's Takeaway

Northern Ireland businesses must be prepared to navigate a complex and evolving customs environment, especially in the face of a potential US-EU trade war. The Windsor Framework offers some protection, but businesses need to be proactive in managing risk. Keep your documentation accurate, monitor tariff changes, and be prepared for shifting customs policies.

Expert Recommendations:

• Monitor tariffs closely: Stay updated on any changes in US, EU, and UK tariffs, especially regarding goods imported from outside the UK and EU.

• Ensure accurate customs documentation: Properly declare the origin and destination of goods to avoid unnecessary tariffs.

• Explore alternative markets: Diversifying trade partners could reduce reliance on potentially volatile regions.

• Consult with customs professionals: Work with experienced customs agents to navigate complex customs procedures and stay ahead of regulatory changes.

Disclaimer:

This blog is for educational purposes only. For specific advice, particularly regarding legal or financial matters, it is essential to consult with legal professionals or customs consultants.

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