Explainer: How will the new US tariffs on EU goods affect Irish business?

With days to spare before the deadline for agreement, US President Donald Trump and European Commission President Ursula von der Leyen agreed a tariff rate of 15% for EU goods being exported to America. 

However, goods exported from Northern Ireland will subjected to a tariff rate of 10%, after Britain negotiated a deal with the US in May. IBEC - Ireland’s largest business interest and lobby group - has said that domestic retail is “unlikely to see any major first round effects from tariffs” but that Ireland could be vulnerable to a “slump” in the economy due to tariffs. 

The Irish Government has valued the Ireland-US economic relationship at more than one trillion euros. 

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Ibec’s Executive Director of Lobbying and Influence, Fergal O'Brien said: “On our first count this morning of the tariff codes that are impacted by the US tariffs announced last night, we’re going to see three percent of our export base impacted by new tariffs”. 

Pharmaceuticals

Pharmaceuticals are Ireland's biggest export to the US and were valued at €44 billion last year. 

It's understood, specific generic medications, which have not yet been named, will be exempt from tariffs. Aircraft and plane components will also be excluded from the 15% tax. 

Further details regarding the tariffs for the aviation and pharmaceutical industries will emerge as they are negotiated. 

Steel

The US will place a 50% tariff on EU steel and aluminium. Ireland exported approximately €342.3 million worth of iron and steel to the US, EU and Asian markets in 2024.

However, European Commission chief Ursula von der Leyen has said the tariffs on steel may be replaced with a quota system, following further negotiations. 

How will tariffs affect Irish business in practice?

Tariffs work as a tax on exported goods which is levied on the importer, and is added a percentage of the overall product’s price.

There has been a question as to whether US-Irish firms may be exempt from tariffs upon entry to the US market.

The US administration has not yet announced exactly how the new tariffs will be applied to imported goods in practice, however the US Trade Administration website states that any product from a company of American origin which is “substantially transformed” in another country will be subject to tariffs before entering the US. 

Trump’s aggressive tariff system intends to encourage US companies to source their materials domestically rather than from abroad, and to encourage US consumers to buy American products. However, some economists have said that tariffs are likely to hamper economic growth and will add to inflation. 

Response

Tánáiste Simon Harris reacted to last night’s deal, stating that “I have always stressed that tariffs are damaging and will have a negative impact on companies exporting to the US.”

On a positive note, Harris elaborated: “This agreement will avoid tariffs of 30% being imposed by the US on 1 August and will also avoid the EU imposing its own countermeasures at this time.”

Ibec’s Fergal O’Brien described the new American tariffs as an “isolationist” policy.