{"id":127733,"date":"2025-10-17T09:37:08","date_gmt":"2025-10-17T09:37:08","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/127733\/"},"modified":"2025-10-17T09:37:08","modified_gmt":"2025-10-17T09:37:08","slug":"are-we-overegging-the-threat-from-us-tariffs-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/127733\/","title":{"rendered":"Are we overegging the threat from US tariffs? \u2013 The Irish Times"},"content":{"rendered":"

Global trade is fragmenting. Protectionism <\/a>is on the rise. Financial markets seem to be headed for an AI-related correction.<\/p>\n

But the globalisation dynamic that has turned Ireland into one of the biggest per capita exporters in the world is not about to be reversed by Trump<\/a>\u2019s America First agenda.<\/p>\n

That\u2019s not to dismiss the threat from tariffs, but to put it in perspective.<\/p>\n

[\u00a0Cantillon: Ireland forecast to be fastest growing economy in 2025Opens in new window<\/a>\u00a0]<\/p>\n

The amount of Irish exports in the line of fire is minimal, equating to roughly 2 per cent of the State\u2019s total export trade.<\/p>\n

Some \u20ac58 billion of \u20ac73 billion worth of Irish goods shipped to the US last year were pharma related which, for now, remain outside the tariff dragnet.<\/p>\n

And while Trump has threatened to throw the kitchen sink at the industry \u2013 last month he raised hitting pharma companies with a 100 per cent tariff unless they manufacture in the US \u2013 this is mere posturing, Trump\u2019s stock in trade. <\/p>\n

Markets haven\u2019t reacted. And since issuing the threat, Washington has struck deals with industry bellwethers Pfizer and AstraZeneca.<\/p>\n

Both companies, which have large operations here, have agreed to lower prescription drug prices in the US in return for a reprieve on tariffs.<\/p>\n

\u201cWe now have the certainty and stability we need on two critical fronts, tariffs and pricing, that have suppressed the industry\u2019s valuations to historic lows,\u201d Pfizer chief executive Albert Bourla said.<\/p>\n

Not the sort of sentiment you would expect from company facing a fatal blow to its transatlantic trade.<\/p>\n

[\u00a0Ireland \u2018uniquely vulnerable\u2019 to Trump pharma tariff threatOpens in new window<\/a>\u00a0]<\/p>\n

Imposing punitive tariffs on pharma is also high risk for Trump as the biggest buyer is domestic healthcare and higher prices will almost instantaneously pass-through into higher prices for consumers at a time when inflation in the US is edging up. <\/p>\n

That leaves the \u20ac15 billion of Irish goods exports that are not pharma and that will potentially be hit by tariffs (albeit a portion of this is semiconductors which are, for now, also outside the scope of tariffs).<\/p>\n

The \u20ac15 billion represents just 2 per cent of the State\u2019s total \u20ac809 billion export trade in goods and services.<\/p>\n

[\u00a0Irish exports to US drop by 60% in June as effects of Trump\u2019s tariffs take holdOpens in new window<\/a>\u00a0]<\/p>\n

No doubt bad for the sectors and companies involved, but not something that is going to make a serious dent in the economy.<\/p>\n

The Central Bank modelled the potential hit from a 15 per cent tariff applied to the State\u2019s entire \u20ac73 billion export trade with the US, concluding it would result in a 1 per cent drag on national income over the longer term.<\/p>\n

When you consider the economy is expected to grow by almost 11 per cent this year \u2013 in conventional GDP (gross domestic product) terms \u2013 according to the Department of Finance, 1 per cent is statistically negligible. <\/p>\n

Ireland is in the enviable position of having an export sector comprising mainly acyclical, defensive sectors \u2013 medicines and tech services \u2013 which are less sensitive to downturns as the pandemic illustrated.<\/p>\n

The bulk of Germany\u2019s exports to the US \u2013 heavy machinery and cars \u2013 are subject to tariffs and are more likely to suffer if discretionary spending gets hit in the event of a tariff-induced downturn.<\/p>\n

The EU\u2019s willingness to give in to Washington in trade negotiations \u2013 in contrast with China\u2019s hardball stance \u2013 reflects Germany\u2019s trade vulnerability.<\/p>\n

\u201cThe world is uncertain. Donald Trump says many things. Ireland is in the relatively envious position of having no tariffs on the majority of its exports (to the US),\u201d Bank of Ireland chief economist Conall Mac Coille says.<\/p>\n

\u201cAnd if anything the imposition of tariffs on pharma looks less likely in the wake of the US administration\u2019s deal with Pfizer,\u201d he says.<\/p>\n

Markets have got used to Trump\u2019s taco (Trump always chickens out) dynamic which was on display again last week when he threatened to bring hellfire down on China over its new export controls on rare earths, causing a mini market wobble, before making more conciliatory overtures.<\/p>\n

A similar pattern has played out with other trade partners, causing markets to all but dismiss Trump\u2019s maximalist threats.<\/p>\n

Crucially, the Central Bank\u2019s analysis predicts tariffs won\u2019t \u201cdramatically\u201d damage inward investment. <\/p>\n

\u201cIn the absence of more significant policy shifts, multinational activity in Ireland is unlikely to change dramatically in the coming years given the substantial sunk costs of investment, though corporate tax receipts from MNEs [multinational enterprises] could change much more rapidly,\u201d it said.<\/p>\n

By \u201csignificant policy shifts\u201d, the regulator means changes to US tax system that might frustrate the offshoring of multinational business. <\/p>\n

Trump\u2019s big beautiful tax bill was decidedly light on such measures. <\/p>\n

A big bang in global trading patterns would, in theory, be amplified in a small, export-led economy that is heavily reliant on US investment hence the wall-to-wall media coverage of Trump\u2019s trade threats.<\/p>\n

But for now it looks as if we will motor through another economic crisis \u2013 there have been several in recent years (the clampdown on multinational tax avoidance, Brexit, Covid, inflation, war) \u2013 in a better state than many of our peers.<\/p>\n","protected":false},"excerpt":{"rendered":"Global trade is fragmenting. Protectionism is on the rise. Financial markets seem to be headed for an AI-related…\n","protected":false},"author":2,"featured_media":15676,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[79,18,19,17,6221,1411],"class_list":{"0":"post-127733","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-eire","10":"tag-ie","11":"tag-ireland","12":"tag-trump-presidency","13":"tag-us-tariffs"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/127733","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=127733"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/127733\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/15676"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=127733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=127733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=127733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}