Tariffs
Tariffs
There are potential risks to Irish corporate tax revenues from US statements about tariffs and a 15% US corporation tax rate - examined in the November issue of Finance Dublin (see pages 3, 5 in the E paper) but, as we comment, positive and enlightened engagement on the part of the new Irish Government, and "Ireland Inc", can turn perceived difficulty in effect into opportunity.
A quotation attributed to one time US Trade Secretary Wilbur Ross about tariffs, a first term President Trump Cabinet-appointee (see page 8 of the November issue) provides an insight as to the possible strategy 'Ireland Inc', and the incoming Government should follow in engaging with the new US Administration on trade matters coming up. Please comment.
Carol Lynch, Partner, Customs and International Trade: "As the new trade statistics issued for October 2024 trade show, Irelands trade with the US is continually growing. Exports in the first 10 months were 30% higher than the same period in 2023 and reach almost €60bn. In October 30% of all our exports were to the US.
Within this our key exports are in the chemical and pharmaceuticals area by a long shot at around 80%.
Within the EU, Ireland is the most dependent country on the US market.
In this context what is the potential impact of President Elect Donald Trumps stated intent to impose up to a 20% tariff on EU exports and how can companies prepare?
The first step President-Elect Trump has proposed will be 25% import taxes on goods from Canada and Mexico, along with potentially an additional 10% on China which are conditional measures to pressure US trading partners into co-operation with policies on immigration and drug-trafficking and tariffs of 100% on the Bric Nations if they take measures which undermine the US dollar.
Along with that, the risk for Irish Exporters is that this will be followed by additional tariffs on EU goods entering the US. This is a real concern and occurred during the first Trump presidency.
In addition, the concern would be supported by the selection of Howard Lutnick to be Secretary of Commerce. President-Elect Trump stated that Mr. Lutnick “will lead our tariff and trade agenda, with additional direct responsibility for the Office of the U.S. Trade Representative [‘USTR]’.” The latter comment has sparked concern in Congress as USTR reports directly to the President, not to another Cabinet Secretary. The Department of Commerce oversees areas such as export controls, anti-dumping and anti-subsidy, authority over these areas was previously used by Trump to implement section 232 tariffs on steel and aluminium.
There are several legislative options for President-Elect Trump to enact the proposed trade policies and we strongly recommend that businesses start preparing a risk analysis as a priority and be ready to take action as and when required.
Options to mitigate the impact might include:
A quotation attributed to one time US Trade Secretary Wilbur Ross about tariffs, a first term President Trump Cabinet-appointee (see page 8 of the November issue) provides an insight as to the possible strategy 'Ireland Inc', and the incoming Government should follow in engaging with the new US Administration on trade matters coming up. Please comment.
Carol Lynch, Partner, Customs and International Trade: "As the new trade statistics issued for October 2024 trade show, Irelands trade with the US is continually growing. Exports in the first 10 months were 30% higher than the same period in 2023 and reach almost €60bn. In October 30% of all our exports were to the US.
Within this our key exports are in the chemical and pharmaceuticals area by a long shot at around 80%.
Within the EU, Ireland is the most dependent country on the US market.
In this context what is the potential impact of President Elect Donald Trumps stated intent to impose up to a 20% tariff on EU exports and how can companies prepare?
The first step President-Elect Trump has proposed will be 25% import taxes on goods from Canada and Mexico, along with potentially an additional 10% on China which are conditional measures to pressure US trading partners into co-operation with policies on immigration and drug-trafficking and tariffs of 100% on the Bric Nations if they take measures which undermine the US dollar.
Along with that, the risk for Irish Exporters is that this will be followed by additional tariffs on EU goods entering the US. This is a real concern and occurred during the first Trump presidency.
In addition, the concern would be supported by the selection of Howard Lutnick to be Secretary of Commerce. President-Elect Trump stated that Mr. Lutnick “will lead our tariff and trade agenda, with additional direct responsibility for the Office of the U.S. Trade Representative [‘USTR]’.” The latter comment has sparked concern in Congress as USTR reports directly to the President, not to another Cabinet Secretary. The Department of Commerce oversees areas such as export controls, anti-dumping and anti-subsidy, authority over these areas was previously used by Trump to implement section 232 tariffs on steel and aluminium.
There are several legislative options for President-Elect Trump to enact the proposed trade policies and we strongly recommend that businesses start preparing a risk analysis as a priority and be ready to take action as and when required.
Options to mitigate the impact might include:
- Reviewing and confirming your tariff classifications to ensure the correct duty will be charged, within this looking at tariff engineering, which would involve modifying a product to achieve a lower tariff classification.
- Determine if the products you sell into the US cannot be sourced locally as there may be opportunities for exemptions
- Look at your supply chain – are there opportunities for sourcing from countries which would be less affected by the new policies?
- Analyse your US purchases – if new US tariffs are imposed there will likely be immediate retaliation from the EU.
- For Pharmaceuticals are your products covered by the WTO Pharma agreement?
- What is the origin of your goods? Is there any risk if there are Chinese parts used in manufacturing? Have they been sufficiently processed to achieve EU origin status?
- Can you be constructive in your value for sales for customs purposes e.g. through using the First Sale principle.