Trump’s Trade Policies Pose Major Risk to Irish Economy

Key Threat: Trade Tariffs and Tax Cuts Could Undermine Ireland’s Economic Growth
Experts are warning that US President-elect Donald Trump’s trade and tax policies could pose one of the biggest risks to the Irish economy in the near term. As Trump takes office in 2025, his plans to implement 10-20% tariffs on imports and reduce the corporation tax rate to 15% for domestic producers could significantly impact Ireland, a country heavily reliant on foreign direct investment (FDI) from US companies.

US Tariffs Could Disrupt Irish Exports
If Trump follows through on his tariff plans, Irish exports to the US—valued at €54bn in 2023—could be severely impacted. Tariffs would likely lead to higher prices for US consumers, making foreign products less competitive and reducing market share for Irish goods. Ireland is particularly exposed to this risk, as US companies account for a large portion of its GDP, with over 970 US firms operating in sectors like chemicals, IT, and financial services.

Impact on US Companies in Ireland
The US is a major player in Ireland’s economy, with approximately 210,000 people employed by American firms. Many of the top global tech companies—such as Microsoft, Meta, Google, and Apple—have established European headquarters in Ireland, attracted by the country’s favorable corporation tax rate (currently 12.5% to 15%). This has bolstered Ireland’s digital economy, which now contributes around 13% of GDP.

However, Trump’s promised tax cuts, if implemented, could lead to a tax rate reduction in the US, potentially eroding Ireland’s competitive tax advantage. Experts are concerned that the lower tax rate for US companies in the US could encourage them to repatriate jobs and operations, reducing investment in Ireland.

Trade War Risks: Uncertainty Looms for Irish Businesses
Beyond tariffs, another concern is the potential for a trade war between the US and the EU. Trump’s proposed tariffs, particularly on European cars, could trigger retaliatory actions from the European Commission. Although there is no immediate indication that US companies will leave Ireland, the uncertainty surrounding Trump’s policies has created a volatile economic environment.

Irish Economy Vulnerable to Global Trade Shifts
Dan O’Brien, Chief Economist at the Institute of European Affairs, has highlighted that the proposed blanket tariffs could lead to a “trade destruction effect”, damaging both Irish jobs and tax revenues. Irish businesses could face difficulties navigating the turbulent trade environment created by such policies, particularly if other European nations respond with their own counter-tariffs.