US president Donald Trump has imposed sweeping tariffs on imports, including 20 per cent on goods from the EU and 10 per cent from the UK, leaving Northern Ireland in an uncertain position and, as a result of Brexit, a unique one.
So what is the situation in Northern Ireland?
Northern Ireland is part of the UK, so its exports face 10 per cent tariffs.
Dr Esmond Birnie, senior economist at Ulster University’s Business School, estimates that Northern Ireland exports about £1.3 billion (€1.5 billion) to the US annually, and imports about £1 billion.
Though he emphasises the uncertainty of the situation, his modelling suggests the impact of tariffs could mean a loss to Northern Ireland of 0.3 per cent of its GDP, or £150 million.
“It will slow down what is already a slow-growing economy,” he said.
“It’s the least worst situation for Northern Ireland,” said Billy Melo Araujo, professor of international economic law at Queen’s University Belfast (QUB).
“But let’s be frank: 10 per cent is a very high tariff, so that is a significant issue in terms of Northern Ireland’s ability to export goods to the US.”
But Northern Ireland’s unique position makes it more complicated. It is down to the US to determine the origin of goods arriving on its shores, so this could be problematic for northern exports that use ingredients, parts or raw materials from both sides of the Border.
There is also the question of reciprocal tariffs. Under the Windsor Framework, the EU-UK deal that governs post-Brexit trade in Northern Ireland, the North must apply EU – not UK – customs rules on imports.
If, as appears likely, the EU imposes retaliatory tariffs on goods imported from the US, then these will apply to US imports coming into Northern Ireland – hence warnings from the DUP that Northern Ireland is “exposed” to potential EU retaliation and must not become “collateral damage”.
Is there a potential benefit for Northern Ireland?
Possibly. Exporters in the south face a 20 per cent tariff, which could give a competitive advantage to exporters in the North who are exporting a similar product, such as Irish whiskey.
However, Prof Melo Araujo said: “This is the difference between theory and reality. In theory, Northern Ireland has a competitive advantage, because thanks to the protocol it can trade freely with the EU, which is still its biggest trading partner, unlike the Republic of Ireland it has full access to the GB market, and on top of that it has the lower end of the tariffs that are being applied by the Trump administration.
“So, relatively speaking, it has a competitive advantage.”
However, he is “not convinced” this will make much difference in practice, not least because of the “volatility” of the current situation.
One area where Northern Ireland could benefit would be if the EU’s retaliatory tariffs focused on services, which is not covered by the post-Brexit trading rules and therefore would not apply in the North; conversely, tariffs on pharmaceuticals would damage the industry in Northern Ireland as well as the Republic.
How has Northern Ireland reacted?
With concern. Minister for Finance Caoimhe Archibald (Sinn Féin) described the tariffs as “deeply regrettable” and warned a trade war would “only fuel inflation and risk recession”.
Among her requests to the Irish and British governments are that the North’s “unique circumstances” are kept in mind during trade negotiations – and considered when any countermeasures are discussed – and that divergence should be “minimised” between Britain and the EU.
This is language reminiscent of Brexit; so too is the uncertainty, which dominated Northern Ireland’s economic and political life for years.
“That uncertainty itself is almost certainly going to impact investment, impact innovation, impact growth,” said Dr Birnie.
It remains to be seen what the political implications will be, though it is not difficult to identify the potential pressure points.
Increased divergence from Britain would be problematic for unionists. For nationalists, it would be equally problematic if an economic border appeared to be created on the island of Ireland for US exports.
“For Northern Ireland, politically as well as economically, if we have growing tensions and divergence between the UK and the EU position, then of course that adds pressure within Northern Ireland,” said Katy Hayward, professor of political sociology at QUB.
“That’s the bigger picture here.”
