Taoiseach Micheál Martin has warned that if US President Donald Trump follows through with a 50% tariff on EU goods beginning in June, it would be “very damaging,” reports RTE.
Trump’s remarks triggered a sharp downturn in European stock markets, a retreat in the euro’s gains, and a steep drop in eurozone government bond yields.
Writing on his Truth Social platform, Mr Trump stated: “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with. Our discussions with them are going nowhere! reports RTE.
The US President also indicated he might impose a 25% tariff on Apple products sold, but not manufactured, in the United States.
Speaking in Cork, Micheál Martin described Mr Trump’s latest announcement as “a surprise,” noting that a pause on tariff hikes had been expected to last until early July.
He emphasised that “everybody in the EU is acting in good faith and wants a negotiated settlement with the United States,” highlighting the importance of the transatlantic trade relationship, which he described as “the most dynamic in the world,” reports RTE.
He added that tariffs of that scale “would be extremely destructive and would create even wider disruption across the global economy.”
“Tariffs are not good for economies, not good for people, for consumers, for workers, so a negotiated pathway is the only way forward,” he said, reports RTE.
He reiterated: “The European Union is prepared to act in good faith with the US to arrive in a negotiated solution here, and that will be the response and approach of the European Union at this particular juncture.”
Markets were shaken by Trump’s dual threats, especially after a recent period of easing trade tensions.
The S&P 500 dropped 0.9% in early trading, while the Nasdaq lost 1.5%. European shares declined by 1.1%, and Apple’s stock fell 2.5% early in New York trading, reports RTE.
The European Commission is seeking clarity from Washington, with EU and US trade representatives Maroš Šefčovič and Jamieson Greer scheduled for a call.
The Commission has refrained from commenting further until the Šefčovič-Greer call takes place, reports RTE.
“This is a major escalation of trade tensions,” said Holger Schmieding, chief economist at private bank Berenberg.
“With Trump, you never know. But this would be a major escalation. The EU would have to react and it is something that would really hurt the US and European economy,” reports RTE.
Currently, the EU faces 25% US tariffs on steel, aluminium, cars, and “reciprocal” tariffs of 10% on most other goods. These were expected to rise to 20% following the end of Trump’s 90-day pause on 8 July.
US officials argue these tariffs aim to correct a nearly €200 billion goods trade deficit with the EU, although America runs a significant services trade surplus with Europe, reports RTE.
Recently, the US sent the EU a list of demands, seeking to address this imbalance. These include removing digital service taxes and adopting US food safety standards, according to sources.
In response, the EU has proposed a compromise involving mutual zero tariffs on industrial goods, increased EU purchases of liquefied natural gas and soybeans, and joint efforts on issues like steel overcapacity, reports RTE.
The Šefčovič-Greer discussion is part of these ongoing talks, potentially leading to a meeting in Paris in early June.
Polish deputy economy minister Michal Baranowski, whose country currently holds the EU presidency, suggested the 50% tariff threat could be a negotiation tactic, reports RTE.
“The European Union and the United States are negotiating. Some negotiate behind closed doors, others more in front of cameras,” he said in Brussels. He noted that public statements may not translate into official policy.
The European Commission has maintained that it prefers a diplomatic resolution, but remains ready to implement countermeasures if necessary, reports RTE.
The EU has already prepared, but suspended, retaliatory tariffs on €21 billion of US imports. It also has a €95 billion list of US goods that could be targeted if talks fail.
Tánaiste Simon Harris echoed calls for dialogue, saying both Ireland and the EU must remain committed to a “negotiated settlement,” reports RTE.
In a statement, the Minister for Foreign Affairs and Trade reiterated the need for “a substantive, calm, measured and comprehensive dialogue” with the US on trade.
Mr Harris stressed that tariffs would “push up prices for consumers and businesses,” and he called for a rational response.
“A negotiated solution remains very clearly the goal and the preferred outcome,” he said, reports RTE.
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