As US-EU trade tensions continue to escalate, now is the time for Irish businesses to prepare for any potential disruption by assessing their potential exposure and supply chain risks, writes John O’Loughlin
On Wednesday, 26 February, during his first cabinet meeting, US President Donald Trump announced tariffs would be imposed on the European Union (EU), stating, “We have made a decision, and we’ll be announcing it very soon. It’ll be 25 percent.”
Although no concrete implementation timeline has been disclosed, nor whether these rates will apply universally to all goods or only to certain industries, Trump indicated that levies would be applied “generally”, implying they would “be on cars and all other things”.
Digital services tax memo
On 21 February, Trump signed a memorandum directing the US Trade Representative to renew investigations initiated during his first term and assess whether US companies are being adversely affected by countries levying Digital Service Taxes (DSTs). The findings of these reports may result in tariffs being imposed on these countries.
Britain, France, Italy, Spain, Turkey, Austria and Canada have been specifically noted within the memo as having DSTs and being subject to this investigation.
The administration will also review EU and British policies that may undermine free speech or foster censorship.
The Trump administration will also examine EU and British policies that could undermine free speech or encourage censorship. Previous tariffs were suspended to facilitate negotiations for a global tax deal, which have since stalled.
Irish and EU reactions
Given the heightened risk of a trade war between the US and the EU that has now emerged, companies in Ireland have been increasingly vocal about the potential impact.
Glanbia noted that the risk of tariff wars “could potentially impact the importation of key raw materials and/or negatively impact on the group’s international sales channels”.
Paul Merriman, founder of AskPaul and CEO of Fairstone Ireland, highlighted that “those who trade in pharmaceuticals and chemicals will see the most notable change as Trump has stated he wants to push manufacturing back onto US soil”.
Key actions for businesses
US import tariffs on EU goods now seem to be an imminent reality. Key actions businesses in Ireland can and should take include:
- Assessing your customs data to understand your exposure;
- Determining the customs origin of goods shipped to the US to see if they are considered to be EU-originating; and
- Gaining oversight of your end-to-end supply chain, including having the right data, to assess the impact on material sourcing and exposure for tariffs on component parts.
Preparing for the future
Keeping up to date with the policies and tariff measures implemented by Trump is crucial to evaluating the potential impact of these tariffs and risks to your supply chain.
While the exact details of the US President’s EU tariffs are yet to be clarified, understanding your product portfolio and the implications these measures may have on your imports is a vital first step.
John O'Loughlin is Partner for Global Trade & Customs at PwC Ireland
You can read John’s earlier article on the global threat of US tariffs at www.accountancyireland.ie
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