Exports of pharmaceuticals and chemicals from Ireland to the US could drop by nearly half if the Trump administration imposes a 20% tariff on the sector and the European Union responds with the same measure, according to the Tánaiste, reports RTE.
Tánaiste Simon Harris presented a memo to the Cabinet outlining the potential economic consequences for Ireland ahead of the anticipated decision by the US to introduce tariffs on EU countries as early as tomorrow.
Ireland exports up to €58 billion worth of pharmaceuticals and chemicals to the US each year, with 32% of the country’s total goods exports directed to the US market, reports RTE.
Ministers are expected to hear that the EU is assuming a 20% blanket tariff will initially apply to all EU countries under the Trump administration’s plan.
However, there remains significant uncertainty regarding whether the tariffs will be sector-specific or even country-specific, reports RTE.
Mr. Harris warned that US tariffs and retaliatory EU tariffs could lead to a “significant reduction of around half in the amount of pharmaceuticals we are exporting” to the US over a five-year span.
He clarified, however, that “all of this is quite volatile and subject to change.”
Speaking before a Cabinet meeting, Mr. Harris said Ireland does not want to find itself “in that space,” reports RTE.
“We don’t want to be in a space where we are seeing 20% tariffs from the EU, we don’t want to be in a space when we see tariffs from the US, we want to be in a space where, as a European Union, where we can sit down with the United States of America,” Mr. Harris said, reports RTE.
“Our economies are interdependent; it’s a trade relationship worth €1.6 trillion between the EU and the US every year. No president of any political persuasion can ignore that reality,” he said, reports RTE.
He described the expected imposition of tariffs by the US tomorrow as “regrettable in advance of even seeing the detail.”
Mr. Harris emphasized the need for Ireland and the EU to respond in a “calm, measured and strategic” manner in the coming days.
He stated that he has been “intensively engaging” with his European counterparts to develop an “informed response” ahead of an EU trade ministers meeting in Luxembourg on Monday, reports RTE.
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Citing an ESRI report, he noted that “up to 80,000 jobs potentially being at risk if the tariffs go the wrong way.”
“We are about to face into one of the biggest economic challenges, and how we steer the country through these challenges in the days, weeks and months ahead won’t just impact us for the next few years, [it] will impact us for the next generation in terms of our economic model,” reports RTE.
The Taoiseach said that both Ireland and Europe must adjust to the impending US tariffs.
Speaking before the Cabinet meeting, Micheál Martin said that the key issue under discussion was how long this adjustment would take.
“We know tariffs are coming, they will be announced. I would hope that there will be negotiation, but what is clear is that even after negotiation, there will be some level of tariffs still in place. The issue now is how high,” he said, reports RTE.
“Then it’s a matter for the Irish economy and the European economy to adapt to that. There are a lot of measures we can take, but fundamentally, the old order is changing in terms of the economic model. The issue is the pace of that change, and the degree to which we can adapt to it,” reports RTE.
Meanwhile, Minister for Public Expenditure Jack Chambers is set to inform colleagues that the best way to mitigate the impact of tariffs is by investing in public capital projects. He will outline plans to review the National Development Plan.
This review will assess public capital investment up to 2030 and will utilize all State funds, including the escrow funds from the Apple case, the Infrastructure, Climate and Nature Fund, and proceeds from AIB share sales.
Minister for Finance Paschal Donohoe reiterated that the Government is taking a three-step approach to the potential US tariffs, reports RTE.
Speaking on RTÉ’s News at One, he explained: “First is the efforts that the Tánaiste Simon Harris is spearheading on our behalf, with other trade ministers, with the Commission, regarding what the response of the EU is.
“Secondly, it’s the work that Minister [for Enterprise] Peter Burke is doing regarding additional steps that we can take to improve the competitiveness of our economy, reports RTE.
“Thirdly and critically, it’s the work that Minister Jack Chambers is doing with regard to the National Development Plan and how we can invest more in energy and water that, in particular, matters to our very large employers.”
He added that these measures could be implemented over several years. He also stressed that while Europe must respond to the US tariffs, it will do so in a “calm and firm manner,” reports RTE.
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