Minister for Finance Michael Noonan has downplayed speculation that Donald Trump's shock election victory in the US could trigger a major investment backlash on Ireland.

Mr Trump has pledged to reduce US corporation tax from 35 per cent to 15 per cent as part of his “America first” economic plan.

The plan also proposes ending the current deferral of tax on profits earned by foreign-based US subsidiaries.

However, Mr Noonan queried whether Mr Trump’s proposals would ever come to fruition.

“I spent all my life listening to US election campaigns where there was a commitment to reform corporate tax. I’ve yet to see tangible measures and I was first elected to a local authority in 1974,” he told an oireachtas committee.

On the likely impact of a lower US corporation tax rate, Mr Noonan said: “It’s the repatriation of profits that is the primary issue. Now, if you reduce that to 15 per cent, it seems to me that that is not an disincentive for setting up abroad.”

“As a matter of fact, it could work the other way because you pay much less tax if you repatriate profits from Ireland in the future,” he said.

However, several analysts warned Mr Trump’s plans posed a serious threat to the flow of US investment into Ireland.

“From an Irish perspective, the concern is that large reductions in the US corporate tax rate and the repeal of deferral would reduce the incentive for companies to locate activities outside the US, including in Ireland,” Deloitte’s Pádraig Cronin said.

“In particular, business functions that do not need to be close to a key market location will now be more likely carried out in the US than elsewhere,” he said.

With tax no longer the key driver of investment decisions, Mr Cronin said the focus of US businesses in future will be more on political environment, economic stability, regulatory regime, labour availability, operating costs, market access and so on.

While Ireland is considered strong in some metrics, such as labour, the current infrastructural bottlenecks in housing and transport may count against it.

New paradigm

Mr Cronin said Ireland needed to review its foreign direct investment (FDI) strategy to ensure it is fit for purpose in the new paradigm.

PWC Ireland managing partner Feargal O’Rourke said Mr Trump’s plans would take away the tax plank of Ireland’s “ foreign direct investment offering”.

“Am I worried about jobs suddenly being sucked back to the US from Ireland? No. You can’t run a global operation from California. But for the next five or six months, US companies are going to say ‘let’s just press the pause button for the moment’,” he said.

Investec’s Philip O’Sullivan also said Mr Trump’s victory may negatively impact investment here, suggesting tougher corporate taxation measures may “cloud the outlook” for foreign direct investment as a whole.

Mr Trump’s protectionist rhetoric may translate into slower global trade growth.“Given the Irish economy’s leverage to international trade growth, this is something we will be monitoring closely,” he said.

The American Chamber of Commerce Ireland, which represents 700 US companies in Ireland, said it was committed to ensuring that Ireland remains a key gateway to Europe and the global location of choice for US investment.

“The key attractions of Ireland as an investment destination – our talented workforce, our competitiveness and the certainty of our legislative framework – are the reasons why US business investment has been so successful here over many decades,” the chamber’s chief executive Mark Redmond said.

Additional reporting by Reuters