Any threat to the landmark trade deal agreed between the EU and the Trump administration last summer would potentially have huge implications for the Republic.
The deal, which set US tariffs on imports from the EU at 15 per cent in exchange for Europe not applying levies on American exports, was described in Department of Finance documents published last Friday as being “of critical importance to the Irish economy”.
The documents, which were drawn up in December for Simon Harris following his appointment as Minister for Finance, maintain that the deal represented “a better outcome for households and firms than the alternative landscape that would have almost certainly included higher tariffs, scope for retaliation and escalation and, ultimately, a higher degree of uncertainty”.
However, the announcement by US president Donald Trump on Saturday that he plans to impose a 10 per cent tariff on goods from several European countries, which could later rise to 25 per cent as part of his efforts to secure control of Greenland, has cast doubts over whether the trade deal reached last July would now be ratified by the European Parliament.
READ MORE
Department of Finance officials told Mr Harris that “crucially” the deal reached between the EU and the Trump administration last summer “now provides assurance that the 15 per cent rate ceiling will extend to pharmaceuticals and semiconductors. This provides an important shield to Irish exporters that could have been subject to much larger tariffs pending the outcomes of section 232 US investigations into these sectors.”
Under section 232 of US trade legislation dating back to 1962, the president has the power to charge duties on imports pending the results of a department of commerce investigation into whether bringing particular goods into the country from abroad had an impact on national security.
The Department of Finance told Mr Harris that the US was this State’s single largest trading partner in terms of goods exports, with about €74 billion exported there last year.
Trump vs the Fed: What does it mean for global trade and Ireland?
“The pharmaceutical sector makes a significant contribution to the Irish economy, contributing via substantial levels of investment and high-paid employment. Around 70,000 workers are employed directly in the sector in Ireland, which last year manufactured €145 billion worth of exports. The US is a critical market for these exports, with the US market accounting for 40 per cent of total exports in the sector in 2024. As such, the assurance provided by the 15 per cent ceiling underlines again the value of the agreement reached in August.”
Analysis carried out for the Government already indicated that the introduction of US tariffs would mean the Irish economy performing worse than in the absence of any such policy.
Department officials told Mr Harris: “An updated analysis of the impact of tariffs on the Irish economy to reflect the current global tariff landscape was published alongside Budget 2026. The scenario modelled is based on US unilateral tariffs of 15 per cent on goods imports from the rest of the world.
“The analysis shows that modified domestic demand ... would be around 1¼ per cent below its no-tariff baseline level by 2030.
“The slowdown in domestic growth would be accompanied by lower-than-assumed employment growth, which is expected to be around two per cent lower compared to a no-tariff baseline.
“Put differently, the level of employment would be around 60,000 lower compared to a scenario where tariffs are not introduced by 2030.”
