Northern Ireland risks becoming “collateral damage” in a US-EU trade war because of the post-Brexit deal that leaves it within the European bloc’s single market for goods, manufacturers and analysts have warned.
UK Prime Minister Sir Keir Starmer said this week that he was “disappointed” that the UK was among countries to be hit by US tariffs on steel and aluminium imports. But if he secures an exemption under a trade deal with the US, Northern Ireland would be at a competitive disadvantage to Britain.
“The challenge is [US] imports into Northern Ireland — because of the Windsor framework, we have to automatically apply EU tariffs,” said Stephen Kelly, head of Manufacturing NI, a lobby group.
“For us, it’s not so much what [Donald] Trump has done. It’s the response from the EU and the potential no response from the UK where Northern Ireland potentially becomes collateral damage,” he said.
US President Donald Trump’s imposition of 25 per cent tariffs on global steel and aluminium imports this week prompted the EU to hit back with a plan for counter measures targeting up to €26bn of American industrial, consumer and agricultural goods. They are set to take effect on April 1.
The Windsor framework is supposed to give Northern Ireland the best of both worlds: unique, unfettered dual access to the UK’s internal market as well as the EU’s single market for goods, which Britain officially left in 2020.
Kelly said he felt “queasy” looking at the EU’s “horrendous” 99-page list of prospective US tariff targets, many of which are used in Northern Ireland supply chains.
“Say we make a product using a widget that comes from the United States and it is on the EU’s 99-page list, then we pay 25 per cent more,” he said. “But if the UK doesn’t have the same tariffs, our competitors in GB would get it at 25 per cent less than what we’re having to pay.”
Northern Ireland’s top imports from the US include machinery, chemicals and manufactured goods and were worth £835mn in 2023, according to official data. Imports from the EU were £6.6bn.
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Emma Little-Pengelly, Northern Ireland’s deputy first minister, told BBC Radio Ulster that if EU tariffs were levied on US goods it was “likely that Northern Ireland would be caught up in this somewhat accidentally”.
Trump insists the EU was set up to “screw” the US. On Thursday, he threatened a 200 per cent tariff on EU alcohol if the bloc imposed a levy of up to 50 per cent on US whiskey.
Kelly said Northern Ireland’s famous Bushmills whiskey would, however, be exempt as Northern Irish goods travel to the US under the UK export trade regime.
Starmer is seeking to secure an economic deal with the US and has not yet announced any tit-for-tat retaliation to the steel and aluminium tariffs.
“If the UK doesn’t apply countermeasures equivalent to the EU, that’s the front at which Northern Ireland becomes exposed,” said Conor Houston, Northern Ireland director at Vulcan Consulting.
“This is a great test of the Windsor framework and the UK’s commitment to Northern Ireland.”
For the region, UK tariffs on the US would be the “least worst option” because it would level the playing field with Britain, Kelly said.
Hilary Benn, the UK’s Northern Ireland secretary, acknowledged there could be an impact on the region.
“As the EU’s response comes into effect, that does have an effect on Northern Ireland, but there is the tariff reimbursement scheme . . . companies can say the goods are staying in Northern Ireland and apply to get the tariffs reimbursed,” he told BBC Radio Ulster.
Kelly, however, called the scheme “nonsense”, saying it was full of red tape and “very few companies have been able to successfully navigate it”.
In a report this week, the House of Commons Library said companies would need to “weigh the cost of making a claim . . . against the amount they can recover”, adding: “In many cases, extra costs may be passed on to Northern Ireland consumers.”
Visualisation by Ian Bott
