Irish exporters to the US urged to review compliance and commercial strategies

Businesses that export to the USA are living through challenging times, the various announcements from the US government regarding tariffs being unsettling for many. As things stand, the standard tariff of 10% on most goods imported into the US that came into effect on 5 April 2025 continues to apply and, while the additional mooted tariff of 20% on goods imported from the EU has been suspended pending the outcome of US/EU negotiations, this suspension is due to end on 9 July 2025 with recent announcements indicating that an even higher tariff of up to 50% may yet apply.

All of this creates a significant degree of uncertainty for businesses and, with talks ongoing, it is far from a given that the picture will be any clearer on 9 July 2025. Nevertheless, and while we cannot be certain of the ultimate outcome, it is probably prudent for businesses to assume that some level of tariffs will apply to exports to the US for the foreseeable future. What steps then should such businesses be taking in response?

Businesses should approach this both from a compliance and a commercial perspective. Most businesses that already export goods to the US are used to handling customs interactions and even tariffs in some cases but, in light of the quantum and potential expansion of the tariffs now mooted, the processes that they have in place in this area should now be reviewed while the commercial impact should be considered urgently.

Compliance issues

From a compliance perspective, we would highlight three key areas.

First, the businesses should have procedures and policies in place for determining product classification as this will play an important role in determining the applicable tariff rate, or if a product may be exempt from tariffs entirely. This will be especially relevant if sectoral as opposed to across-the-board tariffs apply.

Second, the origin of the products should be ascertained and documented appropriately. This is important as what will determine the rate is not where the goods are shipped from but rather where the product originates. In some cases, in particular where multiple ingredients or components are used, this can be complex. In many cases, the manner in which the product is assembled can be important as the place in which it underwent its last substantial transformation can be a key determinant in establishing its origin for customs purposes.

Thirdly, pricing policy should be considered. A multifaceted approach is required here. The valuation methodology for customs purposes must be considered as this will determine the price on which any tariff will apply; this must be a robust exercise, clearly documented, or else runs the risk of encountering customs compliance issues. However, if the goods are moving between different entities (for example between Irish and US subsidiaries) this can also give rise to transfer pricing considerations. On occasion, there may be a tension between the transfer pricing and customs pricing exercises.

Commercial impact

From a commercial perspective, businesses will have to consider the impact of any tariffs on their business models and ultimately on profitability. A key consideration will be whether the business will have to bear the ultimate cost of the tariff or if they can pass on some or all of the cost to their intermediaries and/or end customers. It is advisable to discuss the matter with them at an early stage and to run detailed financial projections of the likely impact.

In some cases, the business may conclude that it is no longer viable to continue supplying the US market long-term and it may have to look at pivoting to alternative markets. This is not an easy or instant process and will entail a considerable degree of research and preparation.

Supply chains should also be reviewed; as the origin of ingredients/components and assembly of the products are crucial to their tariff treatment, consideration should be given to whether alternative supply chains and manufacturing processes should be used.

Finally, while acknowledging that the rapidly changing nature of this area makes it difficult to plan, it is important that businesses stay abreast of developments and put in place processes that can go live if and when necessary. Now is the time to seek out the relevant advice.

Our tax team are on hand to help you with any issues that may arise. Should you have any queries, please do not hesitate to get in touch with a member of our tax department.