Northern Ireland’s Unique Position Amid Changing US Tariffs?

As new tariff terms between the EU, U.S., and UK come into effect under President Trump’s second administration, EU businesses are facing higher costs when exporting directly to the U.S. The contrast in tariff treatment between EU origin and UK origin goods has sharpened significantly, and with it, Northern Ireland’s unique post-Brexit position is once again under the spotlight.

U.S. Tariffs: EU vs. UK 

Under the new U.S.– EU trade agreement, most EU origin goods will now be subject to a 15% import tariff when entering the United States.

Meanwhile, the U.S.– UK trade agreement caps U.S. import tariffs on UK origin goods at 10% for key sectors, such as automotive and industrial components, and offers further relief through quota systems and product specific exemptions (notably in aerospace and chemicals).

In essence, UK origin goods, including those from Northern Ireland, now enter the U.S. market on more favourable terms than those coming directly from the EU.

Northern Ireland’s Position

Northern Ireland’s post Brexit position continues to blur the lines between EU and UK trading systems. As part of the UK customs territory but aligned with the EU Single Market for goods, Northern Ireland enjoys barrier-free access to both the EU and UK markets, along with a hybrid VAT system.

Given the new tariff gap between EU origin and UK origin goods, some EU firms may now be considering using Northern Ireland as a gateway to reduce tariff costs when exporting to the U.S. provided rules of origin requirements are satisfied. EU businesses could potentially qualify goods under UK origin rules and thus benefit from the 10% U.S. tariff rather than 15% tariff applicable to under UK origin rules.

VAT Implications for EU – Northern Ireland Movements

One of the key advantages for EU firms considering this strategy is the favourable VAT treatment of goods moving from the EU into Northern Ireland.

Under the Northern Ireland Protocol, goods moving between Northern Ireland and the EU are treated as intra-community supplies under EU VAT law. This means:

• it can be treated as a zero-rated supply when an EU business sends goods to Northern Ireland.
• No customs declarations or import VAT is imposed at the border.

Once the goods are in Northern Ireland, they can be further processed or integrated into supply chains and subsequently exported to the U.S. with potentially lower tariffs if they meet UK origin rules. From a VAT standpoint, there are virtually no additional costs or barriers for EU businesses moving goods to Northern Ireland, making it an efficient staging point for value-added export strategies.

Conclusion

The newly agreed U.S.– EU and U.S.– UK trade terms have created a new layer of divergence in transatlantic trade. For EU businesses, the new 15% U.S. tariff on EU origin goods is a substantial increase. Meanwhile, UK origin goods from Northern Ireland can enter the U.S. under a more favourable 10% tariff, creating a clear opportunity.

If your business is reviewing international trade routes in light of recent tariff changes, we would be happy to support with any VAT aspects. Contact us here.