Ministers have warned of the “devastating” impact of President Trump’s threatened 30 per cent tariff on goods sold in the United States from European Union member states from August 1.
In a serious escalation of his international trade war, the American leader wrote to Ursula von der Leyen, president of the European Commission, announcing the 30 per cent rate and warning he would also match any retaliatory tariffs from the EU.
Von der Leyen responded by saying the EU would take “all necessary steps” including counter-tariffs, but said Brussels was willing to continue negotiations with the Trump administration.
Analysts claim a 30 per cent tariff would mean at least 75,000 fewer jobs created in the Irish economy and could limit growth significantly into the future.
Micheál Martin, the taoiseach, weighed in behind the European Commission president, saying he was disappointed with Trump’s threatened tariff and urging him to return to talks. “While it has been clear that all options remain on the table, the EU has also been clear that our preference is for a negotiated solution,” he said.
Simon Harris, the tanaiste, called Trump’s move “regrettable”.
Using his online platform Truth Social, Trump posted letters he sent to von der Leyen and Claudia Sheinbaum, the Mexican president, announcing new tariffs on goods from both regions. He sent similar letters last week to 23 other countries, including Canada, Japan and Brazil.
Peter Burke said that sectors from food to aircraft would be hit hard by the threatened tariffs
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Peter Burke, the enterprise minister, said a 30 per cent tariff would be “devastating” for the agri-foods and drinks sector as “it would be stacked on existing tariffs, which would be impossible to absorb”.
He added: “Tariffs on aircraft leasing and the downstream activity to spare parts would be a huge blow to the sector and both Irish and US economies, considering 65 per cent of all global aircraft are leased through Ireland.
“We need to get a pathway agreed quickly as the uncertainty is a large cloud over the enterprise sector. It’s very difficult to do modelling on tariffs considering that supply chains are now highly interconnected and dependent on what happens in other markets like China.
“Our central model of a 10 per cent tariff potentially would see a reduction in modified domestic demand by 1.5 per cent and 25,000 less jobs created in the economy, while a 30 per cent tariff, if applied, would have a significantly greater impact on modified domestic demand and result in less jobs being created.”
Jack Chambers
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Jack Chambers, the public expenditure minister, said: “The continued volatility and uncertainty about trade demonstrates the downside risks for the Irish economy.”
A senior government source sought to play down Trump’s latest intervention by noting he had used similar tactics before when negotiating with other countries. “We expected this and the EU will show a united front,” the source said, adding that the EU and the US had been “relatively close to a potential framework deal for a while”.
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Separately, Fergal O’Brien, head of lobbying at Ibec, the business group, said a 30 per cent tariff would be “extremely damaging”. He warned there was no sector of the Irish economy that would be able to absorb a tariff of the magnitude threatened by Trump.
John Fitzgerald, an economist at the Economic and Social Research Institute, said if a 30 per cent tariff were introduced as a long-term measure, American firms based in Ireland might relocate to the US.
“Nobody is going to relocate because of this in the next year. But long-term, if there was a coherent US strategy which involved big tariffs, then you would say relocation. But nobody is going to build a new factory because of this,” he said.
Neil McDonnell, chief executive of Isme, the small-business lobby group, said small artisan whiskey and food producers and confectioners were among those who would be exposed to the effects of the tariffs. “One of our guys selling an artisan whiskey at 50 or 60 dollars a bottle, they can live with it [a 30 per cent tariff], but Jameson can’t afford that. It’s a high-volume, low-margin product compared to our guys, so they’re in trouble with that,” he added.