US Reciprocal Tariffs on Irish Goods

The press headlines continue to be dominated by President Trump’s announcement on 2 April 2025 of a sweeping range of reciprocal tariffs on goods imported into the US. Effective from 5 April, a general tariff rate of 10% is to apply to all goods coming into the US. A higher 20% rate is to apply on all goods coming into the US from Ireland and other EU Member States, effective from 9 April, alongside a variety of other higher rates to apply on goods entering the US from certain identified countries, such as 34% on Chinese goods.

The Executive Order specifically excludes certain categories of goods from the application of these reciprocal tariffs. These exclusions include steel and aluminium articles and automobiles and automotive parts (which are already subject to tariffs), copper, pharmaceuticals, semiconductors, lumber articles, bullion, energy and certain other minerals that are not available in the US.

The Executive Order signed by the US President providing for these US reciprocal tariffs cites an array of perceived non-tariff barriers to US exports around the world as reason for the US action, including the domestic economic policies and practices of US trading partners, such as value-added taxes. Echoing the criticism voiced by the US President at the St Patrick’s Day White House meeting with the Irish premier, Ireland is called out in economic data presented in the Executive Order in support of the perceived lack of reciprocity that has spurred the introduction of the US measures.

The US reciprocal tariffs should be expected generally to have a considerable impact on Irish companies exporting goods to the US, particularly in the food/drink and agriculture industries, where often the US market is a particularly important one. It will also affect MNE Irish group companies that serve to supply goods to US group companies.  However, despite US focus on Ireland, Irish exporters of goods will be in the same position as exporters from any of the other EU Member States. 

Given the importance of MNE tech and pharma groups both for Irish corporation tax exchequer receipts and numbers employed, it is notable that pharmaceuticals and semiconductors are currently excluded from these new US reciprocal tariffs. Additionally, the tariffs apply only to goods, so Irish service suppliers providing services into the US are not directly impacted by the US measures.

The European Union is “prepared to respond”

As a Member State of the European Union, Ireland’s response to the tariffs will be principally driven at EU level.  The President of the European Commission, Ursula von der Leyen indicated on 3 April that no EU retaliatory response would be made before late April, noting that the EU was “prepared to respond” but willing to negotiate in the short term. The Irish Taoiseach has called for a measured and considered response.  He is not alone in this regard, with the Italian premier calling for a deal to “prevent a trade war”.

The current soundings from the Irish government are that negotiations between the EU and US are expected. Commission President von der Leyen emphasised that the EU would prefer to negotiate with the US to “remove any remaining barriers to transatlantic trade”. The US Executive Order provides for a “decrease [of] the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters”.

As part of the expected political negotiations, a potential EU bargaining chip is the possible targeting of the US services industry. President von der Leyen, in her previous position as EU Commissioner, was the driving force behind challenging several US MNEs under EU State Aid law. Given the importance of US tech MNEs to the Irish economy, the Irish Taoiseach has cautioned against the targeting of such with retaliatory measures, believing that a push on targeting US services, while favoured by some of the bigger EU Member States, was not the prevailing EU approach.

Irish business reactions

Businesses in Ireland exporting goods to the US, apart from those currently excluded, will be clearly and directly impacted by the US reciprocal tariffs.

Possible immediate actions for affected Irish companies, include:

- Review of supply chains, assembly and manufacturing processes. Possibilities may be identified for restructuring to mitigate the impact of increased tariffs. The review may include consideration of tariff classification and customs approved treatment and procedures: there may be means of rearranging the supply chain or processes to avail of more beneficial rates or inward processing reliefs. As services are not subject to the reciprocal tariffs, costs related to services may be identified and unbundling considered.

In the event of retaliatory EU custom duties if they were to arise, and consideration by US MNE groups of restructuring supply chain and relocation of manufacturing activities in order to mitigate any increased EU duties, the EU Court of Justice decision of November 2024, in Harley-Davidson Europe Ltd v European Commission, should need to be considered.  In that case the CJEU held that the European Commission may refuse to recognise a company's relocation of production where the predominant purpose was to circumvent EU customs duties.

- Transfer pricing.  Thought may be given to tariff valuations that currently rely on transfer pricing. As the importer of record is liable for the tariffs, the matter of the relevant party that should bear the cost economically should be considered.  Contract reviews may be necessary in this regard.  The impact of additional tariffs on low margin distributors may need to be reviewed.

- Ongoing monitoring.  The matter of US, and possible retaliatory EU measures, will be the subject of ongoing developments, which should be monitored and with up-to-date support and assistance obtained from relevant professional advisers as appropriate.

- Identification and consideration of new markets.  The EU negotiates free trade agreements on behalf of all EU Member States, including Ireland. They provide for preferential duty rates on the shipment of goods between the EU and signatory countries.

For more information please conatct any member of the ALG Tax team.

Date published: 4 April 2025