US-UK trade deal ‘solidifies’ new tariff regime, says Harris

The trade deal between the United States and the United Kingdom announced last week suggests that tariffs are here to stay – even if there is a trade agreement between the European Union and the US, Tánaiste Simon Harris will tell Cabinet colleagues on Tuesday .

Analysis by Irish Government officials of the US-UK agreement indicates that the risk to Ireland from differential tariff rates on the island has been averted for now. However, Mr Harris will tell ministers that the agreement “solidifies and formalises” tariffs in a way that means they are likely to remain in place in some form.

The Government believes that while Ireland and the EU favour the elimination of trade barriers including tariffs, they are now operating in a “new reality” in which tariffs will be a feature even if there is a trade deal agreed between the EU and the Trump administration.

The Tánaiste’s briefing to Cabinet on Tuesday mirrors comments he made to The Irish Times Inside Politics podcast, where he said it was “concerning” to see that “when the United States does negotiate a so-called trade deal, that trade deal does still see the existence of tariffs”.

“That’s not good – for anybody’s economy,” he said, adding that there was a “new reality” which was not an “optimum outcome.”

Mr Harris discussed the trade issues and the US-UK agreement in a teleconference call on Monday with Northern Ireland First Minister Michelle O’Neill, Deputy First Minister Emma Little-Pengelly and Economy Minister Caoimhe Archibald.

EU foreign affairs and trade ministers will discuss the progress of the EU-US talks when they meet in Brussels on Thursday. But events on Monday indicated that trade policy continues to see-saw in Washington.

Following talks in Geneva, the US and China agreed to suspend the bulk of tariffs for 90 days to allow for further negotiations. US president Donald Trump said that the US was “not looking to hurt China”, though analysts said that the move reflected the growing costs of the trade war between the world’s two largest economies.

Most trade between the two countries had frozen due to the huge reciprocal tariffs imposed in recent months. China had also stopped exports of rare earth metals and magnets, critical components for cars, planes, semiconductors and other products.

In a joint statement, China and the US said they would suspend their respective tariffs for 90 days and continue negotiations on a possible trade agreement. The US will reduce the tariff on Chinese imports to 30 per cent from its current 145 per cent, while China will cut its import duty on American goods to 10 per cent from 125 per cent.

The move highlighted the unpredictability of American trade policy in the early months of the Trump presidency.

Meanwhile, Mr Trump also signed an executive order asking pharmaceutical companies to voluntarily reduce the prices of key medicines in the US, though critics noted that the order cited no legal authority to require the drug companies to lower their prices.

The order said the Trump administration would consider taking regulatory actions or importing drugs from other countries in the future if pharma companies do not comply.

In a post on social media, Mr Trump said that “the United States will no longer subsidize the healthcare of foreign countries – and we’ll no longer tolerate profiteering and price gouging from Big Pharma”. But analysts were sceptical that Mr Trump’s order would lead to lower prices in the US, where drug prices are typically much higher than in other countries, in part because national governments in places such as Europe tend to negotiate big discounts from drug companies for their national health systems.