Northern Ireland could benefit from Trump’s madness. It probably won’t

AT FIRST GLANCE, Northern Ireland isn’t a place where the tariffs announced by President Donald Trump on April 2nd seem most onerous. As a province of the United Kingdom, it faces a 10% rate on goods exported to America, far less burdensome than that imposed on countries such as Laos (48%), Madagascar (47%) or Vietnam (46%). But in few places will the tariffs’ effects be so complex or contentious. It is a case study in how the tidal wave Mr Trump has unleashed will crash through delicate regional politics.

Northern Ireland exists as a sort of economic hybrid, in which the internal markets of Britain and the European Union (EU) overlap. That reflects a complicated Brexit divorce settlement intended to preserve the peace after decades of terrorist violence. Relying on legal ingenuity, a fiddly administrative regime and political goodwill, it sought to create a trade zone that straddles two major economies with minimal checks. Goods can pass with relatively light checks from the British mainland to Northern Ireland, while flows are unhindered south to Ireland and the wider EU. The goal of this delicate arrangement was to meet the desire of unionists to remain tied to Great Britain, the EU’s need to ensure its trade border is properly monitored, and the avoidance of border infrastructure that could reignite violence.

In theory, Mr Trump’s tariffs have an upside for the region. Consider it a sort of Hong Kong of the north Atlantic. The case for opening a factory there will be boosted by its 10% tariff rate. Firms over the border in Ireland will be hit by the 20% imposed on the EU. And the investment proposition will be rosier still if the British government succeeds in securing a deal that alleviates the tariffs. Emma Little-Pengelly, Northern Ireland’s deputy first minister, says there’s “some optimism around the government” to reduce rates further.

Yet, even in Northern Ireland, businesspeople are worried. “If this works and we’ve the best of both worlds, it would be heaven,” says Peter Lavery, who in 2023 founded Titanic Distillers, a whisky-maker, on the site where the doomed liner was launched in 1911. The American market was a big part of his strategy and, as an optimist by nature (he initially made his fortune with a huge lottery win), he is going to Miami soon to push the brand. But he fears that poorer Americans will be put off by rising prices. The company was hoping for sales of a million bottles a year; if they now get half that, he’d be happy. “It couldn’t happen at a worse time for us.”

Declan Gormley, who runs Brookvent, an air-venting firm, agrees. The “slight advantage” the tariff differential with the EU gives the region will be offset by higher tariffs overall, and the uncertainty of what Mr Trump might do next. “It’s better than 20%, but that’s no basis on which people are going to build a factory,” he says. The prevailing mood is trepidation. “Literally none of us knows what this means,” says another local business figure.

Any advantage is also offset by another aspect of the post-Brexit settlement. While exports from Northern Ireland are treated as if they came from Britain as a whole, the tariffs on imports are set by the EU (under a measure intended to prevent Northern Ireland becoming a back door for cheap goods into the bloc). And whereas Britain seems keen not to retaliate against Mr Trump, the EU’s leaders are already preparing to strike back against American goods. That, in theory, may mean Belfast firms paying more than those in Bolton, which is anathema to unionists who want as little divergence from the British mainland as possible. A mechanism by which firms can recoup the difference between British and EU tariffs is new and untested.

The tariff differential risks reigniting another concern of EU leaders: that the light-touch border becomes a way to sneak around Europe’s higher tariffs and stringent product rules. Even when it was laced with army checkpoints, during the decades of sectarian violence known as the Troubles, smugglers moved everything from sheep to diesel over the long Irish border as criminals cannily exploited tax differences or subsidies. A divergence in trade regimes could make the incentives greater.

All of this is a particular headache for the Democratic Unionist Party (DUP). Many unionists dislike the whole post-Brexit arrangement, and are fearful of anything that pulls the province further from Britain’s economic orbit. Yet many senior DUP members also openly supported Mr Trump. Whereas Sinn Féin, the largest nationalist party, boycotted last month’s St Patrick’s Day celebrations in Washington, DUP figures did attend. Gordon Lyons, the party’s tourism minister, brought J.D. Vance, America’s vice-president, a family tree tracing his Ulster-Scots lineage. Ms Little-Pengelly, who met Mr Trump, said she hoped the president might look favourably on the province in the event of any tit-for-tat with the EU, adding that he had “a clear understanding that Northern Ireland was in a different jurisdiction, the UK, and Ireland was separate from that”. Others are less convinced. Mairead McGuinness, Ireland’s former EU commissioner, told RTE, the Irish broadcaster: “I’m questioning and wondering if this is well thought through from the US side.” She is not alone. ■