Most businesses shipping into the US last year passed the cost of US tariffs on to their American customers – but in some cases, where the Irish-based partner used standardised contracts known as Delivery Duty Paid (DPP), they paid tariffs upfront and billed the customer an all-in price.
Delivery Duty Paid is a standard type of import-export contract where the seller covers shipping costs, import duties and any taxes before delivery.
It is one of a number of number of options under the established International Commercial Terms (Incoterms) regime, a set of agreements used to clearly establish the respective responsibilities of importers and exporters in arranging shipments, including at what points liability is handed over and who pays fees and charges, and when.
Under an alternative option, a Delivered At Place (DAP) contract, the fees, tariffs and transport costs are paid by the buyer on delivery.
We grew in the US despite tariffs, and expect to grow again this year
Solicitor Jon Legorbur, head of litigation and regulation at Byrne Wallace Shields in Dublin, says Irish-based entities that shipped under the DDP scenario may have contract claims in Ireland, or be in a position to negotiate with their US counterparts to offset duty paid wrongly last year against future tariffs, depending on their contract documentation.
The US Supreme Court ruled last Friday that many of the penal tariffs levied by the US on imports last year were illegal, finding Donald Trump overstepped his authority in invoking the International Emergency Economic Powers Act to impose what is in effect a tax.
The court did not say if, or how, an estimated US$175bn collected under the now-illegal tariffs should be refunded.
Logistics giant FedEx has already filed a lawsuit in the US to recoup the tariffs it paid, and other US industry and trade bodies are lobbying for refunds.
Donald Trump delivers his State of the Union address. Photo: Getty
Lobbying the US Treasury or suing the US government are unlikely to be practical for Irish exporters, but potentially recovering money under Incoterms may be.
Meanwhile, Irish exporters say their focus is maintaining sales and riding out the latest bout of politically instigated uncertainty.
Managing director of Dingle Distillery, Elliott Hughes, said the Kerry firm’s customers paid tariffs on import, so claims for refunds will lie there.
While tariff uncertainty has returned after Friday’s court ruling, activity has been steadier this time, with less emphasis on “wait and see” and a focus on getting on with things, Hughes said.
As we spoke on Wednesday the tariff on Irish whiskey had fallen to 10pc from last week’s 15pc. By close of business the US had promised to lift it back to 15pc. So there is little point waiting for things to stabilise one way or the other, Hughes thinks.
“We grew sales in the US 35pc last year, despite the tariffs and expect to grow again this year,” he said.
Drinks industry stalwart Pat Rigney of The Shed Distillery, Drumshanbo, has a similar take.
The US is too big a market to give up, regardless of headwinds, the maker of the award-winning Gunpowder Gin, thinks.
“It is challenged, but the US is a fabulous market, it’s a significant part of our business,” he said.
A bigger issue than tariffs over the last year has been the weakening dollar, he says. The currency’s slide created a double whammy for Irish exporters as the tariffs hit.
In the US there’s little public support for tariffs in the long-term, Rigney says.
“We try to ignore the noise of this – and make sure we are there and growing,” he said.
