Paul Krugman, the Nobel prize-winning economist, has claimed that European Union firms will try to export goods via Northern Ireland in an attempt to get a reduced tariff rate when exporting to the US.
It comes as US President Donald Trump has imposed a 10% tariff on UK goods but a 20% tariff on EU goods.
Also as the bell has rung on the New York Stock Exchange and trading was underway again (2.30 PM Monday 7th April BST).
In the first few moments of trade, the S&P 500 is down 3.4%, the Dow Jones is 3.1% lower, and the Nasdaq has fell 4.1%.
Within another ten minutes, the main US indexes slid further.
The Dow Jones was then now down 4.4%, the S&P 500 lost 4.7% while the Nasdaq has fallen 5%.
Ireland
Northern Ireland is part of UK customs territory but it also has an open trade border with the Republic of Ireland, which is in the trading bloc.
“Probably a lot of EU goods trans-ship through Northern Ireland to get the lower tariff rate,” Krugman said.
Typically goods cannot just be exported via a lower tariff country to get a lower tariff.
Instead, they need to undergo “substantial transformation” in the lower tariff country, which usually means some form of processing, although the rules differ from product to product.
Paul Krugman made these crucial comments in a conversation with the journalist Ezra Klein.
Thread
1.
He also said: “It’s not just that he appears to be imposing much higher tariffs than almost anyone expected. He’s also making false claims about our trading partners — not sure in this case whether they’re lies, because he may be truly ignorant — that will both enrage them and make it very hard to back down.”
2.
“The EU, like the United States, has generally low tariffs; the average tariff it charges on US goods is less than 3 percent. So where does this 39 percent number come from? I have no idea.
3.
The sharer of the quotes then wrote: “And if you try to white wash what Krugman here says, well, the guy got his Nobel prize for economics and international trade patterns.”
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