Trump’s tariffs present a puzzle for governments and businesses alike - one with no perfect solution.
These tariffs and the high risk of a global trade war mark a dramatic divergence from the progressive integration of economies over the past 80 years. The UK and, in particular, Ireland have made deep connections with the United States economy.
And for us in Northern Ireland, the US link has been to the forefront for both the peace process and opening up new economic opportunities. The latter was most recently encapsulated through the dedicated engagement of Joe Kennedy III as the US economic envoy.
The tariffs announcement doesn’t mean the end of trade with the United States – far from it. But it will require governments to respond with both agility and pragmatism.
There is a need for some patience and reinforced resilience to see how the trading situation with the US may evolve in the short to medium-term under the Trump Administration.
Further, a future US Government may take a different approach on trade. However, there is the caveat that a full return to the status quo ante may not occur or the certainty of past decades be restored.
Second, other current and new trading relationships, beyond those with the United States, can be further developed. The European Union remains the largest export market for the UK, and even for Ireland the rest of the EU remains a larger market than the US.
The dual market access to the UK and European markets has seen significant growth in exports, with Northern Ireland the fastest-growing UK region. Performance in terms of new inward investment is more contested, but that has been complicated by some infrastructure capacity issues.
Under the new tariffs, this dual market offering remains, and could become even more attractive, albeit with some caution regarding rules of origin complexities.
Instead, the risk comes from differential UK and EU responses in the deployment and scale of retaliatory measures impacting on the flow of imports to Northern Ireland. The current duty reimbursement scheme is widely seen as insufficient.
Up to this point, successive UK governments and the European Commission have displayed considerable pragmatism in seeking to accommodate the interests of Northern Ireland.
Ongoing steps towards greater convergence were presenting the potential of some further easements to some of the particular challenges faced.
However, the danger now is that Northern Ireland becomes an afterthought or collateral damage in how the UK and EU respond to the Trump Administration.
Considerations should include how the UK Government continue to triangulate between the US and EU, and could there be adverse consequences for this region in doing so? And can the EU adopt a different or more selective approach in terms of its retaliatory measures?
It is in this context that almost all local parties are asking for the interests of Northern Ireland to remain uppermost in the minds of the UK government and European Commission.
These tariffs are undoubtedly a major blow. However, there remains a road to be travelled in terms of what happens next, and the underlying indigenous strengths in the local economy remain and can be further built upon.
Stephen Farry is a Professor of Strategic Policy in Practice at Ulster University
