Recent announcements by the Trump Administration imposing tariffs on imports into the US followed by the EU announcing countermeasures with potentially more countermeasures to come on both sides creates significant supply chain and investment uncertainty for Irish businesses.
A substantial trade in goods surplus with the US and open economy means Ireland is uniquely exposed to this changing environment.
We summarise the current state of play and steps businesses should consider to assess and manage risk in the current environment.
What is happening now?
On 12 March 2025 the US imposed additional tariffs on the importation into the US of steel and aluminium from all countries, including derivative products that may contain steel or aluminium. Specifically, the measures result in:
Reinstating a 25% tariff on steel articles and derivative products (e.g., steel pipes, wire and tin foil), terminating all previous country agreements
Increasing the tariff rate from 10% to 25% on aluminium and extending the tariff to other steel articles and derivative aluminium articles.
The tariffs will affect a range of products including cookware, window frames, machinery, certain electrical appliances and furniture. These measures were first announced by the US on 12 February 2025 and will impact approximately €26 billion of EU exports to the US (5% of total EU goods exports to the US).
The EU responded by announcing that countermeasures originally introduced in 2018 and 2020 against the US but subsequently suspended would be reinstated with effect from 1 April 2025. The EU subsequently pushed back the reinstatement date to mid-April.
These measures were introduced as a result of steel and aluminium tariff measures announced by the first Trump Administration but were subsequently suspended when the US agreed to suspend its measures on EU exporters within a certain quota.
The EU countermeasures will result in the EU imposing tariffs on a range of imports including Harley-Davidson motorbikes, bourbon, orange juice, jeans, steel and aluminium and impact approximately €6 billion of imports from the US.
The EU has also commenced a two-week consultation to identify a further €18 billion of other US products which will be subject to new EU tariffs. It is expected the new tariffs will be introduced by mid-April.
The proposed targeted products include a mixture of industrial and agricultural products (steel and aluminium products, textiles, leather goods, home appliances, house tools, plastics, wood products, poultry, beef, certain seafood, nuts, eggs, dairy, sugar and vegetables).
The above measures are separate to the tariffs recently imposed by the US against Canada, Mexico and China and which resulted in those countries announcing their own countermeasures.
What tariff rates are generally applied by the EU and the US?
The weighted average tariff rate applied by both the EU and the US is 1% approx. However, whilst the majority of goods attract a tariff at 0% rate, products within particular categories of goods can attract substantial rates.
High level examples of average rates applied by the EU and the US are: motor vehicles (10% in the EU, 2.5% in the US), dairy products (30% in the EU, 17% in the US) and petroleum (2.5% in the EU 6.5% in the US). It is important to note these are high level examples only and the exact specification of a product is needed to identify the tariff rate applicable
The EU and the US have entered into free trade agreements with many countries around the world (for instance the EU with UK, Canada, Japan, South Korea; the US with Mexico and Canada) but no such agreement exists between the EU and the US.
Accordingly, there is no ability for EU importers to claim preferential rates of duty, typically 0%, on importing US produced goods or for US importers to claim duty preference on EU produced goods.
Do the tariffs apply to all goods shipped between the EU and the US?
No. The country of shipment should not affect the imposition of tariffs on their import into the US or the EU. Rather, tariffs will be imposed on EU origin goods imported into the US, and US origin goods imported into the EU.
The question of what is the “origin” of a product can be complex, but as a rule of thumb it means where the good was substantially made or produced. Origin should be carefully considered as various factors can impact on the analysis. As a high level example, in principle:
- What harvested in Canada, exported to the US and subsequently shipped to the EU should not be considered of US origin and not subject to the EU countermeasures.
- EU imports of jeans manufactured in China, produced from US cotton, should not be subject to the EU countermeasures.
How does this impact Ireland?
Ireland’s 2024 trade in goods with the US represented 32% (€73 billion) of total exports and 17% (€23 billion) of total imports.
Whilst dwarfed by Ireland’s services trade deficit with the US, Ireland’s goods trade surplus is a focus of President Trump’s administration. As Ireland’s export economy is largely driven by the pharma, medtech and food/drink/agri sectors, these industries are most, but not exclusively, at risk of being targeted by US tariff and non-tariff measures.
Aside from the steel and aluminium tariffs imposed by the US on 12 March 2025 on imports of EU origin goods as well as the tariffs on motor vehicles announced on 26 March, it currently remains unclear to what extent additional measures will be imposed by the US on other EU origin goods. This will change on April 2 when the Trump Administration is expected to role out additional measures, in particular under the banner of reciprocal tariffs.
The US administration’s view that VAT is like a tariff means that even products that carry little or no tariff on import into the EU (i.e., most goods including pharmaceuticals and electronics) may become subject to significant tariffs when exported to the US.
In addition, countermeasures introduced by the EU on 12 March 2025 mean that many businesses in Ireland will face increased costs. Allied with the wider measures introduced by the US, in particular against China, Mexico, and Canada and with the risk that the trade dispute will escalate in the short-term it is vital that businesses fully understand the impact of the announced measures and monitor developments closely.
How will this play out?
The situation is fluid with events changing almost daily. A pattern is however emerging of the US announcing measures, suspending some whilst also threatening additional measures. Whether the US will back down in the face of the proposed EU countermeasures is yet to be seen.
In the short-term, there is likely to be an escalation of measures by the US followed by additional countermeasures by the EU. In particular, the US is assessing a series of measures beyond articles of steel and aluminium, for instance on pharma, medical devices and food/drink products.
In this context, the Trump Administration has stated it is exploring the imposition of reciprocal duties on all products and is expected to announce measures on 2 April. The legal basis to support reciprocal measures is however unclear.
Importantly, the US administration considers VAT to be a tariff. Applying that logic, products that attract nil tariffs in both the EU and the US such as finished pharmaceutical goods could become subject to US tariffs of circa 25% or more.
There is also speculation that pharmaceuticals are being examined closely and could be made subject to tariffs under Section 232 authority (which assesses national security risks associated with imports) being the instrument used by the US to impose increased tariffs on steel and aluminium products.
Irish businesses should be aware that the tariff dispute could also impact on supply chains beyond EU/US trade. As the US applies new tariff measures on goods imported into the US from other countries around the globe, producers in those countries will look to new markets to supply their goods.
The risk is that foreign producers may focus on the EU market and that may in turn prompt the EU to introduce measures to protect EU producers. As a result, businesses that today incur a nil or low tariff on imports of goods into Ireland from other countries, may find that those tariffs increase as a result of the EU having to put in place protective measures.
What should I do?
As a first step, we recommend businesses obtain a full and detailed understanding of their supply chain, being clear about the nature of the products sourced from suppliers, the country of origin of those products, as well as how announced measures can impact on purchases and sales.
We have developed a tool which can give real insight based on your customs data – for more details, click here.
Our process
1. Analysing trade data
Interrogating trade data to give a clear understanding of your supply chain, allowing you to assess the potential duty impact on purchases and sales.
2. Reviewing supply agreements
Identifying whether contracts include price adjustment clauses for increased duty charges or lock-in exclusive relationship.
3. Assessing classification and origin
Determining appropriate goods classification and origin to establish whether goods can fall out of the proposed duty measures.
4. Modelling “What if” scenarios
Quantifying duty impact under various scenarios, stockpile, supplier shift, “origin” shift, classification shift
5. Reducing customs value
Eliminating non-dutiable amounts, first sale for export to US, downward transfer pricing adjustments.
6. Establishing duty suspension regimes
Using customs warehousing, duty drawback (US), Free trade zones (US), Inward Processing (EU) to remove/reduce duties
7. Monitoring developments beyond the EU
Risk of EU countermeasures against flooding of EU market impacting on imports, with reciprocal measures applied by affected territories impacting exports.
How can KPMG help?
With a team of over 50 VAT and Customs advisors, KPMG helps businesses manage the uncertainty created by the new US tariffs and EU countermeasures by:
- Helping you obtain and analyse your trade data, to provide you with a clear picture of your supply chain and where risks and opportunities lie
- Using our tariff tools modelling the impact on the business of new tariff measures
- Modelling and quantifying duty costs and opportunities under various “what if” supply chain scenarios
- Identifying and taking advantage of bonded warehousing, inward processing, free-trade zones and drawback to achieve savings and minimise duty costs
- Reviewing classification and origin to identify opportunities to avoid or minimise increased duty costs
- Reviewing valuation methodologies to reduce amounts subject to tariffs
- Monitoring developments to keep you informed of the evolving landscape
Contact Richard Cowley or Glenn Reynolds of our Indirect Tax team to discuss how these tariffs could affect your organisation. We look forward to hearing from you.
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