Nobel Prize-winning economist Paul Krugman has suggested that some European Union firms might seek to export goods through Northern Ireland to take advantage of reduced tariff rates when sending products to the United States.
Currently, US President Donald Trump’s administration has imposed a 10% tariff on UK goods and a 20% tariff on EU goods. While Northern Ireland is part of the UK customs territory, it maintains an open trade border with the Republic of Ireland, which is within the EU.
During a discussion with journalist Ezra Klein, Krugman indicated that “a lot of EU goods” might be routed through Northern Ireland to benefit from the lower tariff rate. However, Krugman noted that goods typically cannot simply pass through a lower-tariff country to qualify for reduced duties. To do so, they generally need to undergo “substantial transformation,” meaning they must be processed or modified in some way, although the specific requirements vary by product.
Krugman, who was awarded the Nobel Prize in Economics in 2008 for his work on international trade theory and economic geography, made these comments in a recent interview.
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