Since the confirmation of increased universal tariffs at the start of April from the US administration, we have already seen significant market disruption leading to a 90 day pause on universal tariffs, which in turn hastened a recovery in equity markets and abated panic in US bond markets. However, this still leaves economic uncertainty for many businesses, particularly tech companies in Ireland.

Sean McCarthy, tax director and technology and media industry co-lead at RSM Ireland said: “Tariffs depend on the physical movement of goods across international borders, so naturally, mass-produced consumer tech products were always going to be in the firing line.

“The technology exemption announced over the weekend will be welcome news to top tech businesses as smartphones, computers, and other electronic devices will avoid reciprocal tariffs, which has already brought about further rebounds to equity markets. This exemption acknowledges a fundamental – that consumer technology supply chains are inextricably global – so fostering an economy where goods are priced out of affordability was never going to be palatable for mass-manufacturers, investors, or social media networks alike.”

Ronan Gilmartin, audit partner and technology and media industry co-lead at RSM Ireland added: “However this reprieve could be short-lived as the US administration has already clarified that it is assessing further ways to levy the industry, creating even more uncertainty.

“While the industry is used to change having adapted to OECD’s Base Erosion and Profit Shifting measures, the pace of change in this instance doesn’t allow much time for consideration or strategy which presents certain risks. Namely an inevitable slow-down in M&A, which will acutely hit the technology sector on the cusp of an AI revolution.

“However, tech businesses can be nimble as they are not normally shackled with heavy capital and have the benefit of remote working, so they can relocate more feasibly. This could lead to tech companies gravitating to jurisdictions where barriers of trade are least prominent.”
 

We'll be keeping a close eye on technology tariff updates and the impact on Irish businesses. Keep up to date with the latest updates on our Technology and media page.