Tariffs, global tax and more

Background

Given the ever-shifting direction of US trade policy and the speed at which policies are changing with respect to the implementation of tariffs, and more broadly the impact on international trade and tax policies, see below our weekly update on tariffs, global tax and more.

The week in summary 

For the first time in over two months, there has been relative calm with little changing in respect of the tariff situation in the US. Although the 10% baseline tariff, and the 25% tariffs on steel & aluminium and autos, remains in effect and the additional duty on China continues to cause disruption in global trade, the Trump administration has made no new announcements regarding the imposition of tariffs.  

The imposition of the 90 day pause on additional country specific tariffs has provided space for negotiations to open up between the US and multiple trading partners. While no deals have yet been announced, it is understood that he Trump administration has met for talks with counterparts from Japan, India, South Korea, the European Union, Canada and Mexico, among other nations.  

In respect of China, President Trump, at a White House news conference on Tuesday, indicated that there would be some movement on the current high tariff rate stating the tariff would “come down substantially, but it won’t be zero”. This was following on from remarks made by Treasury Secretary Scott Bessent, who said that the high tariffs were unsustainable and that he expects a “de-escalation” in the trade war between the world’s two largest economies. Although no timeframe has been put on this “de-escalation”, this represents positive steps in respect of the ongoing US – China trade war.  

Planning for change 

While the 90-day pause has halted the additional country specific tariffs, businesses are still dealing with the challenges of the increased 10% baseline tariff on all goods. In addition, businesses still have to consider the impact that increased tariffs may have in certain sectors (such as semiconductors and pharmaceuticals) should they be introduced in the near term.  

Therefore, it is important not to fall into the trap of taking no action or ceasing planning activities due to this pause. There are still key actions which should be taken in the business to scenario plan for the future and ensure there is agility to respond to any further change:  

• Obtaining and analysing your customs import/export data to determine exposure to tariffs (both at current rates and for any future rates); 

• Completion of dynamic modelling within the business to identify all possible future scenarios and actions which would be required by the business to maintain a competitive edge; 

• Analyse and consider medium to long term strategy with a cross functional team.

Pharmaceutical sector 

In recent days, nearly three dozen global pharmaceutical companies sent a letter to the head of the European Commission outlining the requirement for help to maintain operations in the EU, despite the threat of US tariffs on pharma imports. The letter, sent to President Ursula von der Leyen, outlined the cost disadvantages faced by the companies - including Pfizer, Eli Lilly and AstraZeneca – versus business in the US.  

US President Donald Trump has said he expects to impose tariffs on imported pharmaceuticals in the near future. Last week, European pharmaceutical companies warned von der Leyen in a meeting that US tariffs would hasten the industry's shift toward the US and from Europe.  

Recent figures from the Central Statistics Office show that Irish exports of medical and pharmaceutical products jumped by €9.2 billion, or 145.7%, to €15.6 billion in February on the same month last year. The CSO said this represented 63.2% of total exports in February, which underscores the significance of the pharmaceutical industry to the Irish economy.  

Economic outlook 

On Tuesday, the International Monetary Fund (IMF) sharply lowered its forecasts for world growth for this year and next, warning the outlook could deteriorate further as President Trump’s tariffs spark a global trade war.  

The IMF cut its projection for global output growth this year to 2.8% in its updated World Economic Outlook, released on Tuesday. That is a drop of 0.5% when compared with its January forecast of 3.3%.  

IMF chief economist Pierre-Olivier Gourinchas stated in a briefing with reporters that: "Since late January, many tariff announcements have been made, culminating on April 2, with near universal levies from the United States and counterresponses from some trading partners. The U.S. effective tariff rate has surged past levels reached more than 100 years ago, while tariff rates on the U.S. have also increased. Beyond the abrupt increase in tariffs, the surge in policy uncertainty is a major driver of the economic outlook. If sustained, the increasing trade tensions and uncertainty will slow global growth significantly."  

The effect of these challenges sees the US and China as the countries to see the biggest IMF downgrades with the US forecast to grow 1.8% this year and 1.7% in 2026, a cut of 0.9 and 0.4 percentage points, respectively. China is tipped to grow 4% this year and next, down by 0.6 and 0.5 percentage points.  

PwC US industry analysis 

In anticipation of the imposition of tariffs by President Trump, PwC US conducted a detailed industry analysis on the impact of tariffs in the US. The results of this analysis are confronting with an estimated yearly tariff amount increase to $896 billion (from $81 billion in 2024).  

From an industry perspective, the Technology, Media and Telecom (TMT) sector may see significant impact with a total tariff increase of over $300 billion when consideration is given for additional tariffs which may be imposed in this sector. Industrial products and manufacturing see a rise of approximately $245 billion with automotive and pharmaceutical displaying increases of approximately $69 billion and $55 billion, respectively.  

What is clear from this analysis is the significant impact that continued tariffs will have on these sectors and the cost of goods when imported into the US.

We’re here to help you

Keeping up to date with US trade policies, trade agreements and new and existing tariff reviews which may lead to further tariff measures is crucial to assessing the risk to your supply chain and the impact these tariffs may have. Understanding your product portfolio and the impact that tariffs may have on your imports is an important first step. We are here to support your business with this analysis and navigating these choppy waters.