It could be stated that in its trade deal with the US, the most important engagement so far with President Trump in his second term, the EU has chosen appeasement. Facing a potential trade war, negotiators led by the European Commissioner Ursula von der Leyen prioritised putting an end to the months of anxious speculation, whatever the cost.
In return for this stability, which Trump has been threatening to undo ever since the deal was agreed, the American president essentially got everything he wanted. Not only are tariffs on EU goods now set at 15 percent, more than triple the pre-Trump figure, but the EU will buy $750bn (€641bn) worth of American energy and direct European companies to invest $600bn (€513bn) in the American economy. Moreover, no tariffs in the other direction have been imposed, giving American companies a huge advantage over their European counterparts. What the EU seems to have failed to grasp is that Trump approaches these types of negotiations like a bully: he knows what he wants and demands complete subservience.
So what will this all mean for EU citizens, particularly in Ireland? This is still not completely clear – the initial agreement reached in Scotland at the end of July was one of broad strokes, as is common for trade deals. The uncertainty about the situation was manifested by the fact that it took nearly a month for the more detailed paper to be published, when this usually happens days after. What we do know is that European companies will struggle to keep up their exports to the US, which amounted to €532bn in 2024. To absorb the nearly €80bn in tariffs, they will have to pass costs on to US consumers, meaning higher prices and likely lower sales. Overall, it is likely that American companies will benefit while European companies will suffer, making things harder for ordinary Europeans as more money will end up going back to America. There will also be further dependency on the US thanks to the energy purchase. Similarly to how Germany drew criticism at the start of Russia’s invasion of Ukraine for taking a more hesitant line in condemning Russia, with its dependency on Russian oil being noted, this deal will make it even harder for the EU to distance itself from the US position on issues like the genocide in Gaza.
One of the unknowns, which is especially troubling for Ireland, is the status of pharmaceutical products, which amount for half of our exports to the US. The joint statement released in late August included a cap of 15 percent on tariffs on these goods. However, to say that Trump’s statements since the summit had been undermining this would be a huge understatement, with the President threatening up to 250 percent tariff rates in this sector.
Another issue for Ireland is the different tariff levels across the island. Northern Ireland, under the terms of the UK-US deal, is subject to 10 percent tariffs on US exports. Given that so many industries, such as dairy, work and are interconnected across the border, this presents some difficulties as the US does not apply tariffs solely based on the final departing point of goods. For example, if the production of goods takes place on both sides of the border then companies will have to document which exact steps of the process happen in which jurisdictions, so that the right combination of the two rates can be applied. This will increase costs and administrative requirements for businesses across the island.
While the Good Friday Agreement and post-Brexit deals like the Windsor Framework allow for different trade agreements with third parties on both sides of the border, there has not yet been such a situation with as large an export market as the US. This means that there will be many challenges, known and unknown, for as long as these tariffs remain in place.
