Northern Ireland risks being caught in crossfire of Trump’s trade war

LONDON — Northern Ireland could suffer collateral damage in U.S. President Donald Trump’s impending trade war with the European Union — thanks to its hybrid status post-Brexit.

The EU is firmly within Trump’s sights in his escalating tariff raid, with the president promising retribution for the bloc’s “brutal” trade practices by threatening 25 percent tariffs, claiming the bloc was created to “screw the United States.”

In turn, the EU has warned that Trump’s protectionist policies “will not go unanswered.”

U.K. ministers, meanwhile, are scrambling for an exemption to fresh tariffs, in the hope that the country’s “balanced” trading relationship with the U.S. could mean Trump takes a softer approach to Britain than its neighbors across the channel.

But tariffs from any side could create a fresh Brexit headache for traders in Northern Ireland, which is part of the U.K. but has no hard border with the Republic of Ireland. The prospect has already got unionists hot under the collar, while others spy an investment opportunity. 

The biggest issue, according to Joël Reland, a senior researcher at the Brexit think tank UK in a Changing Europe, is if the EU introduces retaliatory tariffs on U.S. imports — something the bloc has insisted it is not afraid to do.

“At that point, Northern Ireland would have to levy the EU tariff at its external border,” he said, pointing to complex post-Brexit rules set out in the Windsor Framework agreed between the U.K. and EU to smooth the flow of trade in Northern Ireland. 

Reland noted that, under a Duty Reimbursement Scheme set out in the framework, importers in Northern Ireland would technically be able to reclaim the difference between U.K. and EU duties if they can prove that goods will not move on into the EU. 

“But I can imagine having to reclaim a tariff is still going to make life more complicated for Northern Irish importers,” he said.

‘Backdoor into the Single Market’

Esmond Birnie, a senior economist at Ulster University and former Ulster Unionist Party member of the Northern Ireland Assembly, has spied another complication with a possible EU tariff regime.

“If, as is likely, the EU retaliates with tariffs on U.S.-origin goods, there would be an EU concern about any American products using Northern Ireland as a backdoor into the Single Market,” he explained.

Birnie also fears Northern Ireland stands to lose if the U.S. imposes tariffs on the EU. 

Northern Ireland could suffer collateral damage in U.S. President Donald Trump’s impending trade war with the European Union. | Andrew Harnik/Getty Images

“The key thing,” Birnie explained, “is [Northern Ireland’s] hybrid status — [it is] still part of the U.K. internal market, but de facto in the EU’s Customs Union. So it is conceivable any U.S. tariffs against EU products could apply to Northern Ireland origin goods,” he explained. 

Birnie predicted that Northern Ireland customs and businesses could try to “evade” tariffs by rerouting sales to the U.S. and purchases of U.S. goods through Great Britain. 

However, he added, “there would be extra cost in doing so, for example, ferrying good from Belfast to Liverpool and then on to New York.” It could also cause checks at the Irish Sea border to intensify to control for such activity, he fears.

But Billy Melo Araujo, a law professor at Queen’s University Belfast, believes this scenario is unlikely.

“If the U.S. decides to apply tariffs on the EU, the effect on Northern Ireland should be limited because goods originating from Northern Ireland count as U.K. goods, unless we’re talking about EU goods that were moved into Northern Ireland and then exported to the U.S., or goods assembled in Northern Ireland which contain a lot of EU inputs, such as complex industrial goods.”

‘Ideal middle-ground location’

Sam Lowe, a partner and trade expert at Flint Global, warned that Northern Ireland’s hybrid status could also be exploited by Irish exporters hoping to avoid U.S. tariffs. 

“Due to the high risk of circumvention, [such as] Irish products being shipped [to the U.S.] via Northern Ireland, I would expect greater scrutiny of Northern Irish exports, particularly if there is a noticeable uptick, and stricter rules of origin enforcement,” he said.

But an uptick in goods moving via Northern Ireland is not necessarily such a bad thing, a senior Stormont official, granted anonymity to speak on a sensitive issue, told POLITICO.

“The [Northern Ireland] Protocol and Windsor Framework give Northern Ireland a potential trading and investment advantage even in regards to transatlantic tariffs,” the official said. 

“The risk of U.S.-EU tariffs might open opportunities for us even as they, inevitably, create new costs and red tape for everybody. We’re well used to that because of the whole Brexit saga.

“If it happens again with a new landscape of long-term tariffs, it will probably be a mixed bag for us — hassles and irritants in the global supply chain and unintended consequences, to be sure, but also a chance for Northern Ireland to put itself forward as an ideal middle-ground location for a manufacturer that wants to avoid U.S. tariffs on EU goods and wants to be able to export equally into the EU, the U.S. and the rest of the U.K.”

According to the latest trade data from 2023, Northern Ireland goods and services exports outside the U.K. totaled £16.2 billion, of which £1.9 billion was destined for the U.S. market. By contrast, exports from the Republic of Ireland to the U.S. totaled around €58 billion that year.

‘Unintended consequences’

Unsurprisingly, not everyone feels the same way in Northern Ireland’s fraught political landscape, with a number of Unionist MPs jumping on the issue in the weeks following Trump’s inauguration.

Northern Ireland customs and businesses could try to “evade” tariffs by rerouting sales to the U.S. and purchases of U.S. goods through Great Britain. | Paul Faith/Getty Images

Upper Bann MP Carla Lockhart told POLITICO Northern Irish businesses “should not be disadvantaged by barriers that do not apply to firms in Great Britain.”

“The government must be alive to unintended consequences that leave our economy at a disadvantage. We need a fair and pragmatic approach that supports jobs, investment, and Northern Ireland’s place within the UK’s internal market,” she said.

North Antrim MP and Traditional Unionist Voice leader Jim Allister called for an “ending [of] the current arrangement whereby part of the U.K. has left the EU and part of the U.K. remains in it.”

“The government should do so by declaring the Windsor Framework void, on the grounds that it is contrary to the cardinal principle of international law which requires valid treaties to respect for the territorial integrity of sovereign states,” he said.

Asked how the U.K. would protect Northern Ireland from tariffs in the House of Lords on Tuesday, Business and Trade Minister Maggie Jones was vague. “We are considering what action will be in the best interests of all U.K. businesses and will make sure the implications for Northern Ireland are considered in those discussions,” she said.

This story has been updated.