Blog post

US trade policy under Trump: Potential implications for the Windsor Framework and Northern Ireland

Published 13 November 2024

Following the recent re-election of Trump, much has been written on the potential impact a Trump administration could have on the international trading system and the UK’s external trade policy. However, one area that has not yet received much attention is how a Trump presidency might affect Northern Ireland, particularly in light of the Protocol/Windsor Framework, which governs trade between Great Britain, Northern Ireland, and the European Union. This framework has been critical to stabilizing Northern Ireland's trade regime post-Brexit and its place within the UK internal market, but the potential revival of Trump’s mercantilist/protectionist policies could present certain challenges.

The Windsor Framework and the risk of a trade war

One of the most immediate concerns for Northern Ireland under a Trump administration is the potential for a trade war between the EU and the United States. Trump has voiced his intention to increase tariffs on a variety of imports, echoing the protectionist approach taken during his first administration. If the US were to apply increased tariffs on EU imports, it is likely the EU will retaliate with its own tariffs, a pattern seen in past trade disputes.

Under the Windsor Framework, Northern Ireland remains subject to the EU’s trade remedies regime, meaning that any retaliatory tariffs imposed by the EU on US goods would apply in Northern Ireland as well. Such measures would affect US imports when being moved from GB into Northern Ireland, effectively subjecting these goods to EU tariffs within the UK internal market. A very recent example of this can be found when the EU decided to impose countervailing measures on Chinese electric vehicles, which led some to accuse the EU of creating an EV border between GB and NI.

A similar scenario would likely occur if a Trump administration were to aggressively increase tariffs on EU goods and the EU was to decide to retaliate by targeting US imports. Given that US goods account for an important share of NI imports, this could lead to significant additional barriers to GB-NI trade as well as create additional costs for businesses and consumers in the region. Relatedly, it is worth noting that the ‘Stormont Brake’ process – by which updates to certain EU laws that apply under the Protocol/Windsor Framework can be halted in Northern Ireland – cannot be triggered in relation to EU trade remedies.

The “At-Risk” Regime and the danger of a UK-US Free Trade Agreement

A Trump presidency may also create pressures for the operation of the Windsor Framework’s “at-risk” regime. Under this regime, goods imported into Northern Ireland from non-EU countries are subject to EU tariffs if such goods are deemed “at risk” of being moved on to the EU internal market. Such tariffs will only not apply under specific circumstances; (i) if UK tariffs on those goods are higher than the applicable EU tariff, or (ii) if the importer is part of the UK Internal Market Scheme and the tariff differential does not exceed 3%.

If a Trump administration were to pursue a trade agreement with the UK, as some reports have suggested, such an agreement could substantially reduce tariffs on US imports into the UK. And, if the Trump administration were not to pursue a similar arrangement with the EU, this could result in the significant widening of tariff differentials between the UK and EU for U.S. goods. Indeed, under the “at-risk” regime, more US goods entering Northern Ireland would then be subject to a higher EU tariff, even if they move through GB. In short, whilst a UK-US trade agreement might reduce barriers to trade between the two parties it would also lead to an increase in barriers to trade between GB and NI.

A threat to the collaborative approach of the Windsor Framework?

One of the main achievements of the Windsor Framework was to restore cooperation and stability to the operation of Northern Ireland’s post-Brexit trade regime. It replaced the contention and toxicity which characterised the EU-UK relationship regarding the Protocol with a more collaborative approach that emphasizes ongoing problem-solving between the EU and the UK. This cooperative spirit is essential to the regime’s viability, as it allows both sides to address emerging issues without escalating tensions.

A Trump presidency, however, could threaten this newfound spirit of collaboration. Trump’s mercantilist and unilateral approach to international trade could place significant strain on the EU-US relationship, which could in turn have impact the political context within which the Windsor Framework operates. Should the EU and the UK find themselves at odds over how to handle US trade policies, this could undermine the collaborative approach which has so far characterised the operation of the Windsor Framework. Such a scenario risks reigniting the “toxicity” that was a constant feature of the implementation of the original Protocol. Alternatively, a Trump administration may provide additional incentives for the EU and the UK to work together constructively and reinforce the cooperation and trust-building that has been steadily developing since the Windsor Framework.

As the UK navigates its relations with a potential Trump-led US, it will need to weigh the economic benefits of a closer US trade partnership against the possible negative ramifications for Northern Ireland’s trade regime. The Trump administration’s protectionist stance may offer trade incentives to the UK but could destabilize the Windsor Framework’s finely tuned balance by reintroducing tariff differentials and disrupting EU-UK cooperation. For Northern Ireland, this would mean the prospect of renewed economic uncertainty and possible isolation within the UK market.

A difficult balancing act ahead?

A Trump administration poses certain challenges for Northern Ireland’s trade arrangements under the Windsor Framework. Trade wars, increased tariff differentials between the EU and the UK on US imports and a risk to the collaborative spirit which has been a feature of the post-Windsor Framework EU-UK are all potential challenges to the continued operation of the Northern Ireland’s post-Brexit trade regime. For the UK then, aligning closely with a Trump administration’s trade policies may bring certain economic and geopolitical gains but it also risks generating further complexity and undermining Northern Ireland’s place within the UK internal market. For the UK then, the advent of a Trump administration may mean making difficult choices that balance trade and geopolitical goals with the need safeguard stability in Northern Ireland.