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The announcement on 2 April 2025 and subsequent signing of an Executive Order by US President Donald Trump introducing tariffs on goods imported into the USA has the potential to impact significantly on Irish businesses that trade internationally.
With effect from 5 April 2025, a baseline tariff of 10% will apply to goods imported into the USA from all countries. In addition, many countries will be subjected to reciprocal tariffs from 9 April 2025 that will have the effect of increasing the total tariff. In the case of the EU, this will push the tariff to 20%. It is important to note that these tariffs are in addition to any existing duties and import taxes that may apply.
While the tariffs will apply to most goods, there are a number of exclusions. Critically for the Irish economy, these exclusions include some (but not all) pharmaceutical products and semiconductors; however, there is some expectation that these may be subject to tariffs at a later date. Also excluded are certain products for which special tariffs have already been announced, notably the 25% tariff on steel and aluminum and on motor vehicles and certain motor vehicle parts, as recently announced.
Three key factors will determine the tariff applicable – the product classification, the country of origin and the value of the goods imported.
In particular, it is important to note that the rate of tariff is determined not by where the goods are shipped from but rather by their country of origin. Generally, in the case of imports into the USA, this is the country in which the goods were produced or where their last significant transformation took place. It is therefore important that those exporting to the USA clearly ascertain the country of origin of those goods and retain the relevant proof and certifications. This may require a degree of work, and for many Irish businesses the nature of the all-Ireland economy and special position of Northern Ireland may add a level of complexity.
The value of the goods is also key. Businesses should therefore consider their valuation methodology for customs purposes; in many cases, this will have to be considered in tandem with transfer pricing and the entity’s tax structures and strategies more generally as well as commercial considerations.
The EU is considering a response to these measures and there is a possibility of tariffs being introduced on certain imports into the EU from the USA. Therefore, for those businesses importing goods into Ireland from the USA, similar to exporters above, it will be important to understand the product classification of such goods (it is also expected that, unlike the US tariffs announced last week, any EU tariffs will be product-specific and not blanket in nature), to have procedures in place to ascertain their country of origin and to consider the valuation methodology for customs purposes.
Per the announcement of 2 April 2025, the UK is to be subject to a tariff of 10%, which is lower than the EU tariff. Businesses exporting from Northern Ireland to the USA should therefore be subject to this lower tariff but only if the goods can be shown to be of UK origin.
Should the EU introduce countermeasures, then it is likely that goods imported into Northern Ireland from the USA will be subject to the EU tariff on the basis that there is a risk of them entering into the EU market. Under the terms of the Windsor Agreement, this is likely to be the case even if the goods are intended for the UK market. If it can subsequently be shown that the goods did in fact remain in the UK, then the difference between the EU tariff and any UK tariff may be reclaimed from HMRC, but this is likely to be a cumbersome process for businesses.
Businesses impacted by last week’s announcement, and by any possible EU countermeasures, should take the following steps:
Our tax team are on hand to help you with any issues that may arise. Should you have any queries, please do not hesitate to get in touch with a member of our tax department.
