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Since the re-election of President Donald Trump, the USA, as well as many other parts of the world, have been highly concerned what steps he will make over the next four years, especially in regards to America’s economy.
Unfortunately over the last few months it has come to light that he will be making a major adjustment by launching a global tariff increase on over 57 countries that are large exporters to the US.
His reasoning for placing these tariffs is to boost US manufacturing and to protect their jobs however, these tariffs are having a large impact on other parts of the world with a 20 per cent tax on EU goods.
This is causing the economy in multiple countries to go into chaos with prices of goods expected to rise drastically over the next few months. But how is this going to affect Ireland?
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Over the last few days we’ve seen Gabriel Makhlouf, Central Bank governor, state that the USA’s tariffs pose a “major downside risk” to Ireland’s economy.
The first noticeable impact the tariffs will have on Ireland’s economy is within the food sector. According to Bord Bia, in 2024 we saw food exports to the US and North America rise by 14 per cent which equated to a total of €2 billion.
Ireland and the US have long had a great partnership when it comes to exporting goods between the two countries, especially premium Irish products such as beef, dairy and Irish whiskey. Now with the addition of these tariffs, their partnership is on the rocks.
Throughout the first phase of Trump’s tariffs we will see a major price increase on food exports which could be a serious issue for Irish businesses as it may deter American companies from investing in Irish companies.
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These effects on Irish companies are a slippery slope causing the business to lose customers, have to reduce their stock, potentially cutting back on staff leading to unemployment and could also end in the brands closure.
The North of Ireland may be affected differently by the tariffs as they have a lower tariff of 10 per cent due to the UK’s post-Brexit trading status. This could make the North the most appealing place to export goods, especially goods that are ‘Irish made’.
One of the largest discourses around Trump’s tariffs involves pharmaceuticals. Last year the value of Ireland’s total exports to the US came to an astonishing €72.6 billion and €58 billion of the total figure was due to pharmaceutical and chemical industries.
There has been many different fearful narratives spreading throughout the country, understandably so considering the pharmaceutical industry is the main contributor to our US exports.
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After placing a pause on his “reciprocal” tariffs for ninety days, up until yesterday Ireland was under the impression that the second stage of tariffs will hit the pharmaceutical sector however, Donald Trump has now hinted at a tariff reprieve for the pharmaceutical companies.
Trump is now inviting the pharmaceutical companies to set up their organizations in America which will avoid tariffs completely. If not the pharma companies will be met with targeted border taxes or a “tariff wall” as soon as this coming Tuesday.
At Trump’s “invest in America” televised meeting Trump spoke on the pharma issue stating: “We are going to be getting tremendous amounts of drug and pharmaceutical companies going to be pouring into the country…We’re going to give them a lot of time to do it.
“But after that, it’s going to be a tariff wall put up, and they won’t be happy about it, but they’ll be happy if they start building right now, right now, it’s going to be build, and after a certain period of time, it’s going to get tougher, tougher, tougher, and then it’s going to be real hard to do business in this country.”
With Trump chopping and changing his plan more regularly than not there isn’t an exact guarantee of how Ireland’s economy will look over the next year however, so far the effects seem to be understandably concerning.
