Hybrid Trade Status Puts Northern Ireland at Risk in US–EU Tariff Dispute

The Democratic Unionist Party has urged the UK government to take action to exempt Northern Ireland from any EU retaliatory tariffs targeting the United States.

DUP leader Gavin Robinson gives his first speech as party leader at conference during the annual Democratic Unionist Party conference at Park Plaza hotel in Belfast, Northern Ireland, on Sept. 21, 2024. Charles McQuillan/Getty Images

Northern Ireland’s hybrid post-Brexit trade status could place it in a complex position if the United States imposes new tariffs on both the UK and the EU—and if Brussels responds with retaliatory measures.

On April 2, U.S. President Donald Trump is expected to announce reciprocal tariffs on most of Washington’s trade partners, a plan that raises tariffs on foreign goods to match what other countries impose on U.S. exports.

This follows a round of tariffs in March on steel and aluminium imports, as well as vehicles and auto parts, affecting both the UK and the European Union.

Unlike the EU, which announced counter-measures on a range of American goods, the UK government has resisted taking immediate retaliatory action against the tariffs but says “all options” remain on the table to respond in the national interest.

Under the Windsor Framework, Northern Ireland remains part of the UK customs territory but continues to apply EU rules on goods. This arrangement prevents a hard border with the Republic of Ireland but leaves Northern Ireland exposed to the shifting trade policies of both London and Brussels.

If the EU reciprocates, those levies would apply to American imports entering Northern Ireland, but not to goods entering the rest of the UK, unless the UK itself chooses to mirror EU measures.

This could lead to a scenario where U.S. goods are more expensive in Northern Ireland than elsewhere in the UK.

On the export side, Northern Ireland goods sent to the United States are classified as UK exports and would be subject to whatever tariffs Washington applies to the UK as a whole.

Northern Ireland a ‘Serious Issue’

In a Commons exchange on Wednesday, MPs urged Prime Minister Sir Keir Starmer to take steps to exempt Northern Ireland from EU retaliatory action against the United States.

DUP leader Gavin Robinson said that prioritising the UK’s national interest should account for the interests of Northern Ireland, which he added were “no longer solely” in Starmer’s control.

“Exports from Northern Ireland are UK exports, rightly so, yet imports to Northern Ireland could lay at the consequence of EU retaliatory action in keeping all of his options open,” Robinson told Starmer.

In response, the Labour leader said that Northern Ireland was “at the forefront of discussions,” adding that Business Secretary Jonathan Reynolds spoke to the Northern Ireland Executive, the devolved government in Belfast, on Wednesday morning about this “serious issue.”

Starmer told MPs that Belfast would benefit from the government’s “calm and pragmatic” approach in relation to tariffs.

“We are looking carefully at the details of any retaliatory tariffs announced by the EU, if they are and what impact they might have on businesses. Where goods do not enter the EU, then businesses can claim a full reimbursement of any EU duties paid,” he added.

Tariff Reimbursement Scheme

Northern Ireland importers can apply for a tariff rebate under a mechanism that allows reimbursement, provided the goods remain within Northern Ireland and are not moved into the EU.

During a Commons exchange on Wednesday, Northern Ireland Secretary Hilary Benn warned of potential challenges “in respect to Northern Ireland” if the EU introduces countermeasures in response to U.S. tariffs.

Secretary of State for Northern Ireland Hilary Benn departs Downing Street after attending a weekly Cabinet meeting, in London on April 1, 2025. Peter Nicholls/Getty Images

Benn told MPs that any U.S. tariffs would be “felt equally” across the UK. However, if the EU imposes retaliatory tariffs, businesses in Northern Ireland may be required to prove that goods imported from the United States are not leaving the UK in order to qualify for reimbursement.

Former DUP leader Nigel Dodds has criticised the scheme, noting that businesses have struggled with it and that very few companies have successfully navigated the process.

“Northern Ireland is faced with EU tariffs being imposed on our imports with no say,” he said on social media platform X.

‘Really Important’ Deal

Benn has urged caution against “snap decisions” as the UK continues efforts to negotiate an economic agreement with Washington.

Starmer echoed the urgency, calling a U.S.-UK economic deal “really important at this moment,” while warning against “knee-jerk reactions.”

Economists suggest that a trade deal would insulate Britain from further tariffs and lead to greater export business opportunities on both sides of the Atlantic.

Meanwhile, some nations have moved preemptively to secure favourable terms.

On Tuesday, Israel announced it had eliminated its remaining tariffs on U.S. imports, in effort to “reduce barriers” and bolster its “special relationship with the U.S.”

Vietnam has offered tax breaks to U.S. businesses, including on ethanol, liquified natural gas, and some types of cars.

Vietnam is one of the so-called “Dirty 15” of countries with which the United States runs its largest trade deficits. Other nations include China, Mexico, Germany—and by extension the EU—Japan, South Korea, and Taiwan.

Economists anticipate average U.S. tariffs on Chinese imports to rise to 60 percent, with other countries likely facing an additional 10 percent increase on current rates.