Economic effects of the US trade policy changes on Northern Ireland’s trade

This research paper examines potential effects of the recent changes in the US trade policy on Northern Ireland’s trade. In addition to overall effects, the research also examines sector-specific effects considering the different responsiveness of trade to tariffs in each sector. The analysis uses a modern multi-country, multi-sector Quantitative International Trade Model accounting for trade in final goods as well as intermediate inputs and international input-output linkages. This modelling framework captures both direct effects of tariff changes on trade flows as well as second round effects of trade policy changes that propagate through complex inter-country inter-sectoral production linkages. The results of the counterfactual analysis indicate that, relative to a situation of no tariff changes, the increased US tariffs applied since 2025 would have sizeable negative effects on the bilateral trade between Northern Ireland and the US in the long-run. The largest trade losses are estimated to be in chemicals and other transport equipment in terms of export flows and manufacturing of electrical machinery in terms of import flows. The estimated changes in bilateral trade flows with Great Britain, Ireland, and the rest of the EU members are positive, albeit small, reflecting trade reallocation across import sources and export destinations, in response to the increased US trade tariffs.