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Northern Ireland: Could the EU and UK face a trade war?

An escalating dispute over the post-Brexit trading arrangements for Northern Ireland risks seeing the government scrapping parts of that deal. In that event, could it trigger a trade war that could see households and businesses paying an unwelcome price?

European Union officials have repeatedly warned of "serious" consequences if the UK were to override part of the Northern Ireland Protocol.

Last November, Ireland's minister for foreign affairs, Simon Coveney, warned that the entire Trade and Co-operation Agreement (TCA) - which exists to ensure tariff-free and quota-free trade between the EU and UK - depends on the UK observing the Protocol.

More recently, however, as the war in Ukraine has both heightened cost-of-living issues and co-operation between the EU and UK, Mr Coveney has struck a more conciliatory tone, saying the EU first wants to seek solutions. But he warned that any unilateral action by the UK could spell "a very difficult summer".

And ultimately, it means there is a risk that part, or all of the TCA could be scrapped by the EU unilaterally - albeit not quickly. That would allow the EU to impose tariffs on British-made goods.

In most cases, such action requires notice of up to a year, and an intervening arbitration process.

The EU has scope to pull some other levers in the meantime, perhaps restricting UK fishing vessels entering EU waters for example.

Brussels has already been investigating interim measures, after claiming that British action to delay border formalities last year breached the Protocol. It later paused that process after agreeing to negotiations - but it could decide to resume.

And the fallout of such action could be painful.

Economists warn that the EU could, as has happened in trade disputes with the US, target politically-sensitive products for tariffs to maximise the impact - salmon from Scotland, for example.

A total of £372m worth of Scottish salmon went to the EU last year, supporting thousands of jobs.

Alternatively, the EU could focus action on industries located in the so-called Red Wall seats, in parts of north-east England and the Midlands that shifted from Labour to the Conservatives at the last election. Some of these areas are disproportionately reliant on custom from the bloc.

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