Tánaiste Simon Harris has warned against increased protectionism after US president Donald Trump imposed tariffs on imports from three countries, and the European Union promised “firm action” if he makes a similar move against the bloc.
In a statement on Monday, Mr Harris said the Government noted the US move, adding that raising trade barriers was not in the interests of businesses or the global economy “and would not benefit the EU, Ireland or the US”.
Mr Harris, who has taken responsibility for trade in his new brief in the Department of Foreign Affairs, said any new tariffs on the EU would “create significant challenges” for Ireland and for Europe.
“Ireland is at the centre of the European Union and any imposition of tariffs on the EU would create significant challenges,” he said. “Europe must and will work collectively and with the United States to avoid such a situation emerging and if necessary to mitigate any measures taken.”
He was reacting to Mr Trump’s move to impose a 25 per cent levy on goods coming from Canada and Mexico as well as 10 per cent on goods from China. The tariffs take effect from Tuesday.
The Tánaiste will bring a memo to Cabinet this week on the issue and outline his plan for a high-level group of officials to prepare for potential economic shocks facing Ireland.
He is also progressing plans to convene as many as 35 business leaders and experts – the strategic economic advisory panel – in the US to advise the Government on economic opportunities and risk in the US-Ireland relationship.
In response to Mr Trump’s move Canadian prime minister Justin Trudeau said his Government would place 25 per cent counter-tariffs on $107 billion (€103 billion) worth of American-made products.
Mexico’s president, Claudia Sheinbaum, said she instructed her economy minister to kick off a response plan that includes retaliatory levies, while China vowed “countermeasures to defend its rights and interests”.
While Trump did not include the EU in this first round of charges, he warned on Friday he “absolutely” will impose tariffs on the bloc. The European Commission and member states will discuss the possibility during a trade ministerial meeting in Warsaw on Tuesday.
“The EU would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods,” an EU spokesperson said. “There is a lot at stake.”
Ireland’s exports to the US in the first 11 months of last year were worth more than €67 billion, compared with imports of just €20 billion. Some 80 per cent of these exports were pharmaceuticals and chemicals, industries that Mr Trump specifically wants to move their manufacturing jobs back to the US.
American firms employ about 210,000 people in Ireland, according to the American Chamber of Commerce Ireland, while the State took in more than €39 billion in corporation tax last year, much of it from US multinationals operating here.
[ ‘Dumbest trade war in history’: US reacts to Trump’s tariffsOpens in new window ]
Excluding payments tied to the Apple tax case, the receipts still increased 18 per cent to €28.1 billion and are a vital source of income for the State. At least some of that could be threatened if firms relocate operations from Ireland back to the US.
Simon McKeever, chief executive of the Irish Exporters Association, said US tariffs on EU goods would have a big impact on indigenous Irish businesses that export to the US. Those companies may have to make difficult decisions about whether to continue growing in Ireland or growing in the US, he added.
“That’s the one that really worries me,” he said. “What are they going to have to do to maintain market share and continue to grow in the US?”
The Government must get the message across to the Trump administration that the Republic is a significant investor in the US economy, he added.
Ireland is the seventh biggest source of foreign direct investment into the US, with the likes of Kerrygold-maker Ornua, Kerry Group and CRH, among others, employing thousands of people there.
Irish-owned companies employed an estimated 100,000 people in the US last year, according to US and Irish Government figures.
David Henig, director of the UK Trade Policy Project at the European Centre for International Political Economy think tank, said there is “every reason” to think the EU will soon be a target for the Trump administration.
“Obviously, that is going to leave the Irish economy a little exposed, as per the whole EU,” he said.
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