The Department of Finance and other Government agencies have been carrying out “extensive contingency planning” to combat any possible “disruption and damage” to the Irish economy from US tariffs, the Minister for Public Expenditure Jack Chambers has said.
Mr Chambers’ comments come after US secretary of state Marco Rubio told Tánaiste Simon Harris on Tuesday it was a priority of the Trump administration to address the “trade imbalance” between Ireland and the US.
Ireland exports about €50 billion more goods than it imports from the US every year, a number driven principally by pharmaceutical exports US president Donald Trump and many of the senior figures in his administration regard the existence of trade deficits as evidence that the US is being exploited by its partners
Mr Trump has already imposed tariffs on goods from Mexico, Canada and China, and has promised that tariffs on EU imports are also on the way.
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”We don’t have any specifics or details from the Trump administration about what that [tariffs] might involve and what we’re seeking to do, as well as many other European countries, is articulating the strength of the reciprocal relationship between Ireland and the US and the EU and the US, where, for example, we have a surplus when it comes to the trading of goods, but we have a deficit when it comes to services, which the US exports into Ireland,” Mr Chambers told RTÉ radio’s Morning Ireland.
“So it’s trying to give balance to that broader discussion. And we know that tariffs will bring serious cost to consumers but have an inflationary impact in the US as well and will cause a wider disruption. And that’s why we’re being careful in our overall economic model.”
Mr Chambers said that either a blanket tariff announced across the EU, or a more product or sector specific tariff, would both be “significantly damaging because our whole economic model is on the basis of international trade, and we’ve got a very diversified export model across many different sectors”.
The Minister refused to speculate on the impact on the pharma sector. “Planning has been conducted by the Department of Finance on the impacts of tariffs. And we know that, for example, at the moment it’s about one per cent between the US and the EU. If that goes to 25 per cent, that will have a significant and turbulent impact across the European economy, including Ireland, and we’re calibrating the respective responses which might be required to protect consumers and businesses,” he said.
“But they’re all downside risks. And that’s the broader context in which we reside with deglobalisation and disruption to international trade part of the emerging norms now. And that’s why our overall economic management is central to protect Ireland for the future.”
Mr Chambers said that when the Taoiseach meets with Mr Trump in the Oval office next week, he will emphasise the “broader balanced relationship that exists in economic terms” between the two countries.
”Ireland is the sixth largest exporter into the US, creating over 100,000 jobs. There’s many Irish companies creating jobs across all of the states across the US, and it’s demonstrating the mutual economic benefits which have been yielded from free trade and from international trade, which isn’t reflected in the broader conversation,” Mr Chambers said.
“And it’s just having that conversation with president [Donald] Trump. I know the European Commission under commissioner [Maroš] Sefcovic is similarly reflecting the mutual benefits which international trade has brought to both EU and US citizens.
”And I think if you look at what happened with Canada, and there is reflection by the US administration and some of this and the impacts, and you’re seeing the stock markets, for example, being significantly disrupted when they see the true costs and the crystallisation which occurs from tariffs being imposed.”
Also on Thursday morning, Mr Chambers told Newstalk Breakfast that tariffs were economically counterproductive. “They’ll have serious disruption to integrated global supply chains that lead to higher costs for consumers, increased inflation and protectionism damages economies,” he said.
He acknowledged that Ireland was vulnerable and tariffs would pose a “significant downside risk” for the Irish economy.
“The chief economist would have said to me in the Department of Finance to control our own controllables, that means demonstrating fiscal discipline, continuing to build our fiscal buffers, which are the two funds that we’ve established, the Future Ireland fund, and the Infrastructure, Climate and Nature fund, and also investing in infrastructure in our economy, which are all different types of economic development for the future. And that’s what we’re doing in the context of [the] new infrastructure division being established in my own department,” he said.
