GOVERNMENT spending in next year’s budget “could very well” be cut back because of an economic backlash from Donald Trump’s tariffs, Taoiseach Micheal Martin has confessed.
Stock markets across the globe plummeted today as the world braces for “Liberation Day” on Wednesday when the U.S will announce a major package of tariffs that will shake economies across the globe.
President Trump is expected to announce uniform tariffs on goods coming into America[/caption]
President Trump is expected to announce uniform tariffs on goods coming into America from across the world with specific targets on industries such as pharmaceuticals, steel, cars, semi conductors and wood.
These taxes would devastate Ireland’s economy with some €72 billion worth of goods sold into the US from companies in Ireland last year – the majority of which is pharmaceuticals.
On Sunday, Taoiseach Micheal Martin spoke with European Commission President Ursula von der Leyen about the potential impact of Trump tariffs and how the EU might respond.
The Taoiseach today said that he is hopeful that the EU and US can avoid a devastating trade war and can enter negotiations to find a “landing zone that’s suitable to everyone.”
The Fianna Fail leader said Ireland will try to diversify and expand our trading with other countries around the world to try to make up for some of the losses from the U.S tariffs.
Despite this, Ireland is braced for the economic backlash from these tariffs with the Taoiseach admitting that it could impact how much money they have available for next year’s budget.
Asked about this, the Taoiseach said: “It could very well. We’re going to have to assess that.
“We’re going to focus our spending particularly on capital. We’re going to have to spend more on water infrastructure to allow more housing.
“We’re going to continue to spend on housing. The grid, energy and again that whole energy piece is key to get energy prices down.
“Ultimately that is key for the long term benefit of the economy.”
It comes as Public Expenditure Minister Jack Chambers will today brief the Cabinet on the update to the National Development Plan which sets out spending on major infrastructure projects.
The Spending Minister will tell his Cabinet colleagues that the new development plan will take on a greater significant in the context of the US tariffs and their impact on the Irish economy.
Minister Chambers believes the best way to safeguard of the impact of tariffs is to focus on investing in capital infrastructure to make Ireland a more competitive place to do business.
Tanaiste Simon Harris has urged Irish people to “stay calm and measured” in the wake of the tariff announcement later this week.
He said: “Yes we are entering a time of extraordinary economic turbulence.
“We’re in no way complacent about that. We’re working around the clock on that but what we’ve got to do here is be calm and be measured.
“We’ve got to work at a European level. We’re part of a market of 450 million people in Europe.
“We’ll have this announcement – what President Trump calls liberation day – on Wednesday and we will survey that situation then and the following Monday we will have an EU trade council meeting which I’ll represent this country and we will work at an EU level to see how best to respond.”
