VAT Matters UK – June 2025 – US Tariffs – a changing landscape

In this article, David Reaney and Emma Robinson consider the current landscape for tariffs in Northern Ireland following President Trump’s reciprocal tariff announcement on 2 April; the 90-day pause announced on 9 April; potential retaliation from the EU; and ongoing trade negotiations. Due to the evolving nature of this area the article closes by focusing on key actions which will underpin a good response regardless of the specific changes to come.

The position in the UK

Most readers will be familiar with the headline reciprocal tariff of 10% for the UK, compared to 20% for the EU, which was announced on 2 April. Under the terms of the 90 day pause the 10% rate remains for both the UK and the EU but this difference in treatment, and its potential impact following the conclusion of the pause, is important to understand. Alongside this headline ‘reciprocal’ rate, in April the position was that UK steel, aluminium and cars would be subject to a 25% tariff. However, on 8 May 2025 a US/UK trade deal was announced (also referred to as an economic prosperity deal) and under the terms of this deal a quota of 100,000 cars applies at the 10% rate and a quota for steel and aluminium is also to be introduced. We await further details of this announcement.

The general view following the 2 April announcement was that the UK is in a favourable position when compared with the EU. There has also been a notable difference in the UK’s political response with a focus on a trade deal or economic partnership rather than on retaliatory tariffs.

At the time of writing, it appears that a limited trade deal on tariffs between the UK and the US has been agreed but the known details are very limited.

The position in Northern Ireland

When considering the position in Northern Ireland it is important to understand the importance of the US market to Northern Ireland, both for imports and exports. For exports, outside of the UK and Ireland the US is the biggest export market with just short of £1.5bn of goods exported to the US annually (based on NISRA figures for 2023). On the import side, imports from the US into Northern Ireland represent about 2% of purchases by Northern Irish businesses.

The customs position in Northern Ireland is governed by the Windsor Framework and Northern Ireland remains part of the UK customs territory. Therefore, goods with a Northern Irish origin are treated as UK goods. As a result, a business in Northern Ireland should be able to avail of the arrangements under a UK/US trade deal which may provide an advantage relative to a competitor. However, if a reciprocal (or other) tariff remains this position would be worse than before the 2 April announcement.

Depending on the US position and the EU position following the 90-day pause (due to expire on 14 July) the difference in treatment between the UK and EU for certain goods imported to the US could be significant.

For US goods being imported into Northern Ireland, it gets quite technical from an indirect tax perspective as the ‘at-risk’ definition under the Windsor Framework needs considered. The definition is designed so that a good which is subject to an EU trade defence measure is deemed to be at risk (regardless of its intended use, i.e. whether it will remain in the UK or not).

There is only one scenario where a good subject to an EU trade defence measure can be considered ‘not at risk’ and it is where the good is coming into Northern Ireland from outside the UK and EU and the UK duty rate is higher. As that specific scenario seems unlikely, the working position should be that all US goods which are subject to an EU trade defence measure will be at risk, meaning that duty at the EU rate is due at import into Northern Ireland. Therefore, if a business imports a US good into Northern Ireland, it could be subject to a higher duty rate than a competitor importing the same type of good into Great Britain.

Addressing this scenario the UK Government has been quick to remind businesses in Northern Ireland that both the tariff waiver and tariff reimbursement schemes will be available to help mitigate this issue.

The waiver scheme

The waiver scheme, which is designed to help small businesses, allows for a waiver of duty subject to state aid limits, essentially up to €300,000 on a rolling 3-year basis.

The reimbursement scheme

Under the reimbursement scheme, if it can be demonstrated that the goods on which the EU duty has been paid do not move into the EU then a reimbursement of duty can be claimed from HMRC.

For Great Britain to Northern Ireland movements the reimbursement claim will be for all of the duty. Whereas, for imports from outside the UK or EU, if the EU rate is higher the claim is for the difference between the EU rate and the UK rate.

There has been some feedback from users of the scheme that the evidential burden to receive a successful claim is high and we expect the operation of the scheme will come into sharper focus in the coming weeks and months.

For businesses wishing to avail of these schemes, you should engage with the detail of the guidance and consider documents you might need, for example customs declarations, airway bills, packing lists, evidence of customer orders etc.

Businesses should plan carefully to identify the evidence they will retain and then put in place a process to ensure it is gathered and readily available.

Next steps for businesses

Due to the evolving nature of this issue a big challenge for businesses is being able to quickly and appropriately react to developments. To put yourself in the best position to respond to coming changes we recommend focusing on the fundamentals that underpin the customs system.

Consider the rules of origin – The origin of goods is central to getting things right and the rules are detailed. Often reliance is placed on others in your supply chain so you need to check that you (and others) are getting this right.
Classification – the correct classification of goods is vital. Behind the media announcements are lengthy documents setting out which classification codes are caught by certain tariffs. This detail should be explored to ensure you are getting the right classification of goods.
Customs procedures – If you had previously considered customs procedures like inward processing relief, customs warehousing but didn’t implement these, it may be worth revisiting the detail of these to see if there is now a greater benefit to using these simplified procedures.
The reimbursement scheme – evidence to support your claim is critical to a successful claim. If you are going to place reliance on this scheme, you need to ensure your processes around obtaining and retaining evidence are robust.

We will be following developments in the US and EU as the 90-day pause comes to a close in July and the details of the UK/US agreement are published.

If you have any questions regarding this article or what the implementation of tariffs could mean for your business, please reach out to us at david.reaney@kpmg.ie or emma.robinson@kpmg.ie.

David Reaney FCA CTA is an Indirect Tax Partner at KPMG.

Emma Robinson CTA is an Indirect Tax Associate Director at KPMG.