The escalating imposition of US tariffs on global trade is exerting significant pressure on Irish businesses, disrupting supply chains and squeezing profit margins. As trade barriers rise, businesses across Ireland - particularly those reliant on exports to the US or US linked supply networks - are being forced to reassess their investment strategies and operational models.
Current US tariffs
In addition to the normal MFN (Most Favoured Nation) duty rate that applies to the import of goods into the US, all goods of EU/Irish origin are subject to an additional 10% tariff rate unless falling under one of the following exceptions:
- Pharmaceuticals, semi-conductors, lumber, copper, critical minerals and energy products – such goods are currently not subject to any additional tariff measures.
- Steel, aluminium, and related derivatives which are subject to an additional 25% tariff imposed on 12 March 2025
- Motor vehicles and parts thereof – a 25% tariff applies to motor vehicles effective 3 April and certain motor vehicle parts (engines and engine parts, transmissions, powertrain parts and electrical components) from 3 May.
The US has also imposed the additional 10% tariff rate on imports of goods from most other countries. However, goods of Canadian, Mexican and Chinese origin are subject to separate tariff measures and exceptions (e.g., compliant goods under the USMCA free trade agreement between Mexico, Canada and the US are not subject to additional duties with noncompliant goods facing a 25% rate).
It should also be noted that where goods are subject to the 10% additional tariff rate, a reduction in US duty payable can be sought where the imported good contains 20% of more of US content.
On 2 April the US also announced higher “Reciprocal tariff” rates for selected territories including the EU. The US paused application of these rates until 8 July in order to provide space to enter into trade negotiations with the selected territories. A chart of selected countries and tariff rates is set out below.
US tariffs by country
| EMEA | Reciprocal Tariffs (%) |
|---|---|
| European Union | 20 |
| United Kingdom | 10 |
| Norway | 15 |
| Saudi Arabia | 10 |
| South Africa | 30 |
| Switzerland | 31 |
| Ukraine | 10 |
| APAC | Reciprocal Tariffs (%) |
|---|---|
| China | 34 |
| Australia | 10 |
| India | 26 |
| Japan | 24 |
| South Korea | 25 |
| Taiwan | 32 |
| Vietnam | 46 |
| LATAM | Reciprocal Tariffs (%) |
|---|---|
| Argentina | 10 |
| Brazil | 10 |
| Chile | 10 |
| Colombia | 10 |
| Costa Rica | 10 |
| Dominican Republic | 10 |
| Venezuela | 15 |
There have been further indications from the White House that the tariffs on EU origin goods could be increased but not changes are expected before 8 July.
Ruling of the US Court of International Trade
On 28 May 2025, the US Court of International Trade issued a ruling striking down many of tariffs, including the 10% worldwide tariff imposed by the US administration earlier this year.
The court found that the administration had overstepped its legal authority under the International Emergency Economic Powers Act (IEEPA) to impose tariffs. These tariffs were justified by the administration as necessary to address US national emergencies related to drug trafficking and trade imbalances. The Court ruled that the IEEPA does not grant the president power to impose sweeping duties under the act.
The US administration has filed an appeal with the US Court of Appeals and the case may ultimately be decided by the US Supreme Court. If however the ruling should stand, it opens the door to importers to reclaim back the affected duties from US Customs.
The ruling does not however affect all of the tariff measures introduced by President Trump. For instance, tariffs imposed under different legal provisions (such as Section 232 of the Trade Expansion Act of 1962 which imposed the 25% tariff imposed on steel and aluminium, motor vehicles and parts thereof) remain unaffected.
What are the implications for importing EU/Irish goods into the US?
All goods of EU origin (including goods of Irish origin) are subject to these additional tariffs unless falling under one of the specified exclusions.
The exclusions are limited but importantly for Ireland pharmaceutical products are currently exempted from these additional tariffs. However, the sector is being closely examined by the Trump administration and may be targeted by additional US tariff measures in the future.
It is important to be aware the tariffs are based on the country of origin (not the country of dispatch) and the value. There are rules for determining origin and this is generally based on country of production/last significant transformation and not country of dispatch.
For example, goods made in China shipped to the US from the EU are of Chinese Origin and subject to Chinese reciprocal tariffs not EU reciprocal tariffs.
Latest EU response
The EU Commission has been consistent in its messaging that the US tariffs will “not go unanswered” and will trigger “firm and proportionate” counter measures. In this context, the EU was due to apply its own countermeasures by imposing tariffs on US origin goods imported into the EU commencing on 15 April. However, due to the US pausing implementation of its higher reciprocal tariffs, the EU has delayed implementing its measures until 14 July in order to explore whether a negotiated agreement with the US can be reached.
For these purposes, the EU Commission adopted Implementing Regulation 2025/778 which sets out in its Annexes the list of affected products, their individual EU tariff rate and the date from which the tariffs will take effect in respect of imports from the US (noting Implementing Regulation 2025/786 suspends these measures until 14 July 2025). Businesses should closely review these annexes in order to assess whether the measures may impact the business if they come into effect on 14 July 2025.
The additional duties set out in the Implementing Regulation range from 10% to 25% and impacted products include steel and aluminium, textiles, household goods and appliances, tobacco, yachts, juices, plastics, goods transport vehicles, agriculture products and wood products.
The above measures target €21 billion of US origin goods only and were drawn up in retaliation to the 25% US tariff on steel and aluminium products introduced on 12 March. As the tariffs announced by the US affect €379 billion of EU exports to the US, the EU announced on 8 May that a public consultation on an additional list of US imports which could become subject to EU countermeasures. The list (available here: https://ec.europa.eu/commission/presscorner/detail/es/ip_25_1149) covers €95 billion of US imports into the EU and incudes aircraft, medical devices, motor vehicles (both passenger and goods transport) and parts thereof, testing/diagnostic equipment, computer equipment, alcoholic drinks, horses and other animals, fish and seafood etc.
The consultation is open until 10 June and businesses that may be impacted by the proposed countermeasures are encouraged to submit their views to the EU (EUSurvey - Survey - https://ec.europa.eu/). There are also other measure the EU is considering including certain export restrictions.
The EU also announced the creation of an ‘Import Surveillance Task Force’ to counter the risk of goods flooding onto the EU market. This could arise for instance where exporters in other territories no longer able to sell into the US due to high US tariffs and instead look to sell excess stock into the EU market. In order to protect EU producers, the EU may therefore impose countermeasures on imports of goods from countries other than the US and potentially represent an additional cost for Irish businesses particularly if used to sourcing product at nil or low duties from the Far East.
Ultimately, the period between now and mid-July will be critical in determining whether a negotiated agreement or escalation of countermeasures arises. This will also be impacted by tariff developments in the pharmaceutical industry which is central to Ireland’s exporting economy. In this context the US has threatened to introduce tariffs on pharmaceutical products and an announcement by the US is expected shortly.
What does it mean for the pharmaceutical sector
Currently no duty applies to the trade in pharmaceuticals between the EU and the US. However, President Trump has threatened a 25% tariff rate on imports of pharmaceuticals into the US and a Section 232 trade investigation into the pharmaceutical sector was initiated. Section 232 of the Trade Expansion Act of 1962 allows the US President to impose trade restrictions (e.g. tariffs), on imports if they are found to threaten national security. It is expected that the US administration will make an announcement shortly following the conclusion of the Section 232 investigation.
What does it mean for the aviation sector
The US has also launched a Section 232 trade investigation into imports of aircraft and engines/parts and the EU list of potential counter tariff measures has been expanded to include potential tariffs on aircraft of US origin.
On 1 May 2025 the US administration commenced a Section 232 investigation into the import of commercial aircraft and jet engines, and parts for commercial aircraft and jet engines. This is concerning for the aviation industry as the Trump administration has already used this mechanism to impose a 25% tariff on foreign aluminium and steel and automobiles following investigations into those sectors.
The EU is also examining measures that would impact on the import of US origin aircraft into the EU. Specifically, the public consultation launched by the EU on 8 May to determine US origin products which could become subject to EU countermeasures includes aircraft and some parts. At this point in time there is no distinction between “old” and “new” aircraft or parts on the list. The proposed tariff rate is not indicated but if implemented by the EU is anticipated to be in the a range from 10% to 25%.
What does it mean for Northern Ireland
On 8 May the US and the UK announced a trade deal which allows for reduced tariffs on certain US origin products imported into the UK and UK origin products exported to the US. Most products of origin in Northern Ireland should be subject to 10% tariffs applying to the United Kingdom and not the EU tariff rate. In the event that the US imposes tariff rates higher than 10% on EU origin goods, this would mean a lower tariff cost for product of Northern Ireland origin shipped to the US.
In the event the EU imposes additional retaliatory tariffs on products of US origin, this is likely to complicate the importation process for goods into Northern Ireland from the US. Under the terms of the Windsor Framework this would likely cause the EU tariff rate to apply to US products (as they would be automatically considered ‘at risk’ of moving to the EU), regardless of whether they are for the UK market.
If the goods remain in the UK and this can be evidenced it is possible for the difference between the EU tariff paid and the UK tariff to be reclaimed from the UK under the tariff reimbursement scheme, however, this can be a time-consuming process with a high evidential burden
What should businesses consider now?
For Irish and EU businesses, these developments necessitate a strategic approach to mitigate potential disruptions. Here are some key considerations:
1. Understand the origin and classification of your goods and your valuation methodology
Ensure you fully understand the origin and classification of goods you sell to the US and the possible tariffs that may apply. This should be clear for products wholly produced in Ireland but may be less clear for products imported into Ireland including from Northern Ireland or which comprise substantial parts imported from other countries.
A similar exercise should be carried out for goods imported from the US to understand if your imports may become subjected to additional EU tariffs.
Importantly, and unlike the US measures, the EU countermeasures are targeted and product specific and there is not expected to be a blanket tariff applied to all products of US origin.
The customs methodology for valuation of your supplies is also relevant (e.g. transfer pricing methodology).
2. Assess supply chains
Evaluate your supply chains to identify dependencies on US imports and exports. Diversifying suppliers and where possible exploring alternative markets can help reduce vulnerability to tariff impacts
3. Cost Management
Anticipate increased costs due to tariffs and develop strategies to manage these expenses..
4. Explore customs procedures and other mitigation opportunities.
Depending on your supply chain and operations in Ireland/the EU, there may be benefit in availing of special customs procedures such as Customs Warehousing, and Inward Processing Relief in the EU to mitigate the impact of the EU retaliatory tariffs.
These procedures require a high level of administration and require authorisation in advance.
Similar mitigation options may be available for goods undergoing processing in the US for eventual export, or goods that may be able to be initially stored/undergo processing in the US before possible sale e.g. foreign trade zones.
5. Stay informed
Keep abreast of ongoing negotiations and potential changes in trade policies. There may be changes to these measures in the short to medium term and expect news on the EU countermeasures in the short term.
Managing geopolitical risk
As global geopolitics continue to shift, staying ahead of the curve is essential for maintaining a competitive edge. So what do Irish business leaders need to consider?
KPMG’s Top Geopolitical Risks 2025 shows how by treating geopolitical risk as a fundamental part of business strategy, companies cannot only address threats but also seize opportunities, paving the way for growth and success.
How can KPMG help?
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
- Advising on transfer pricing implications associated with the impact of the tariff changes on group policies
- Interpreting, drafting and negotiating supply agreements to help manage the tariff disruption
- Helping build supply chain resilience and cost efficiencies
Our tariffs team comprises experts across Customs, Transfer Pricing, Legal and Supply Chain who can discuss how the new trading environment can affect your business and help maximise opportunities through the disruption.
