The EU and US are edging closer to a trade deal revolving around tariffs of 15% imposed on European goods.

The details of any agreement will be critical.

Recent discussions have come close to an agreement only to be derailed at the last minute by the White House – and that could happen again.

Based on what is known so far, the EU-US deal would include a baseline tariff of 15%.

Some existing tariffs would be folded into that 15% meaning it would be an all-in tariff. For example, it would include the existing “most favoured nation” duties of 4.8% which exist currently under World Trade Organisation rules.

However, there would be some exceptions. The punitive 50% rate on steel and aluminum, introduced by US President Donald Trump on exports from the EU, would remain in place.

It is understood that what may emerge is an agreement between the two sides that sees the threatened 1 August cliff edge of 30% tariffs on EU goods removed.

It is now long past time to strike a deal.

Tánaiste Simon Harris says he remains “cautiously optimistic” a deal could be reached for a “positive future EU-US trading relationship within the coming days”.

He adds: “It is now long past time to strike a deal.”

Under the framework, which is being negotiated, the US would have some immediate implementation steps, but some aspects would still need further negotiations.

In a boost for Irish exporters, it is expected aircraft, medical devices and spirits would be covered by a zero for zero tariff arrangement.

The critical part for Ireland is what would happen to exports of pharmaceuticals and computer chips to the US.


Ireland exported €44bn worth of pharmaceuticals to the US last year

At present, there are no tariffs on either sector while the US holds an investigation on national security grounds into imports of those goods.

However, indications are that the investigation may result in the EU seeing a 15% tariff imposed on both pharmaceuticals and computer chips once the process concludes.

If that rate is introduced, it would have significant consequences.

Pharmaceuticals are Ireland’s biggest export to the US and were valued at €44bn last year.

Any company faced with a new tariff is going to have to figure out how it will be paid.

Exporters will be asking whether they can make internal savings, adjust supply chains or pass it on to customers?

Donald Trump told Taoiseach Micheál Martin on St Patrick’s Day that Ireland “took” American pharmaceutical companies.

But despite Mr Trump’s comments, no US drug manufacturer with an operation in Ireland has so far threatened to relocate to America.

The baseline tariff of 15% for many companies would have significant effects.


Irish exporters say they will need financial support to adjust to the new tariff arrangements

Simon McKeever, CEO of the Irish Exporters Association, said his organisation would be looking for a “tariff adjustment fund” largely based on the Brexit Reserve Fund of €1bn, which was introduced to help companies when the UK left the EU.

While there may be relief if a deal is agreed it would be a much worse trading environment than Irish companies faced last year.

Tariffs are fundamentally bad for an export-led economy such as Ireland.

Globally, the removal of trade barriers over recent decades has lifted millions of people in developing countries out of poverty.

But perhaps the most damaging aspect of the trade war is that it has created enormous uncertainty and put many investments on hold in Ireland and elsewhere.

If a deal is agreed companies will know the future landscape. And that is likely to unlock investments which had been put on hold.