DONALD Trump announced his anxiously anticipated tariffs package from The White House last night.
The US President had instilled fear in many Irish sectors and Government officials as he vowed to slap Ireland with significant tariffs over the past number of weeks.
Pharmaceuticals were of key concern to many awaiting Trumps announcement with global companies such as Pfizer, AbbVie, Novartis, Johnson & Johnson basing operations here.
The booming industry was spared from the Trump tariffs last night but other key areas were impacted when the US President slapped a 20 per cent tariff on EU goods.
The UK escaped with just a 10 per cent tax while other countries such as South Korea, Thailand and India have seen tariffs of over 25 per cent imposed.
Vietnam were slapped with a 46 per cent tariff on what Mr Trump has called “liberation day”.
Announcing the measures Trump said: “It’s our declaration of economic independence”
Here’s what you need to know about how Ireland could be impacted by the new tax and how it could affect you.
IMMEDIATE IMPACT
Taoiseach Michael Martin said there “is no doubt that the imposition of tariffs by the US will have an adverse impact.”
And experts have warned the immediate impact will hit both consumers and businesses.
Martin Shanahan, Head of Industry at Grant Thornton explained: “The announcement by President Trump of 20 per cent reciprocal tariffs on the EU will unquestionably have a negative impact for Ireland, given its significant trade with the US.
“Once implemented, these tariffs will have an immediate impact in two potential ways, higher consumer prices and lower company profits and most likely a combination of both. In turn, lower company profits will impact corporation tax take over time.
He added: “Medium to longer term impacts will depend on the decisions that companies make around their supply chains, global production, tax, and future investments.”
The tariffs will directly impact the competitiveness of Irish products on the market in US.
This is because countries such as the UK and New Zealand escaped with 10 per cent tariffs, unlike the 20 per cent slapped on the EU.
This will mean that products such as whiskey and dairy from Ireland, that have a huge market in the US, will become more expensive than foreign counterparts.
The Irish Whiskey Association warned this impact could be “detrimental”.
I do believe it is very likely that we will experience an economic challenge in the next number of years”.
Paschal Donohoe
They said: “Should an appropriate resolution not be found, this tariff may have a detrimental effect on the position of the category in the US market, undoing decades of success and growth.
“The US has been the engine of growth for Irish whiskey and spirits, and now represents 41 per cent of Irish drinks exports every year.
“The total value of the US market for the Irish drinks sector is €865 million per annum.”
The Department of Finance and the ESRI have suggested before the announcement that tariffs could cost Ireland more than €18 billion in lost trade.
JOB LOSS & RECESSION
There is huge concern that even though pharmaceuticals escaped Trump’s wrath for now, major companies will still pull out of Ireland or avoid setting up here in the first place.
One of the greatest threats facing Ireland changes to the corporation tax, a major draw for huge companies.
The Government has been warned for a number of years that the low rate of 12.5 per cent can not be relied on.
The Central Bank has said that €15bn of revenue coming from US multinationals is “vulnerable” when it comes to any policy shift in the US
Minister for Finance Paschal Donohoe warned up to 80k jobs that would have been either created or kept within the Irish economy lost as a result.
Asked if Ireland was headed for recession earlier this week, the Finance Minister said: “On the basis of what President Trump has already said I do believe it is very likely that we will experience an economic challenge in the next number of years.
“On the basis of what I currently know, I believe it is most likely that will lead to a lower level of economic growth with a risk to how many new jobs could be created or some lost.”
TAX AND COST OF LIVING FEARS
Paschal Donohoe has warned that the tariffs could have a major impact on October’s budget announcement.
The promised tax cuts in the programme for Government may not go ahead depending on the impact of severe tariffs.
He said the new trade war could leave the Irish government with no choice but to postpone income tax cuts proposed in the last election.
He said: “What we will have to do as we move through the year is further assess what changes in taxation are going to be appropriate in the context of Budget 2026.
“Minister Chambers and I will do that together and neither of us will want to make any decisions in relation to either spending or taxation that might mean that the difficulties that we face in the years ahead could be more complex or could go on for longer.”
Minister Donohoe confirmed that there will be no cost of living package in the upcoming budget as he believes the €2.2billion spent on these measures last year may be needed to protect public services.
Minister Donohoe claimed that Ireland is facing into this economic downturn from a position of strength due to the bumper tax returns from recent years with €15 to €16billion in reserve to help weather the economic storm.
This €16billion is on top of the €14billion Apple tax cash and the billions of euro from the sale of AIB shares that the Government is planning to invest in housing, energy infrastructure, water and transport.
WHAT DOES IT MEAN FOR CONSUMERS?
The exact impact on the pockets of consumers both here and in the US will depend on how the EU reacts.
Tariffs will have a direct impact on the pockets of consumers, but this will vary from sector to sector.
For example, Ireland has a strong animal produce industry with very little being imported from outside Ireland at all, never mind the US.
So while Irish people living in the US may need to pay more for their Kerrygold butter, dairy and meat products, shelves here should see little impact.
And if the EU hits back with tariffs of their own Levi’s jeans, Jack Daniel’s and Harley-Davidsons will jump in price.
The previously announced 25 per cent US tariffs on foreign motors and automobile parts will have a knock on impact on Irish consumers looking to buy a new set of wheels.
Those tariffs kick in today and European car brands who rely heavily on US sales could end up increasing prices of brands such as Mercedes and BMW here.
This may be in an attempt to offset loses due to a potential fall in US sales.
And this is a fear that expands across many sectors.
WHAT’S THE WORST CASE SCENARIO?
The worst case scenario at the moment is a full on trade war.
There are fears that the EU’s response could spark “a trade war not seen in decades”.
Deirdre Hogan, EY Ireland Indirect Tax Partner warned: “President Trump has imposed a minimum of 10 per cent tariffs on all countries and 20 per cent on imports from the EU. Ascertaining that the US has been treated unfairly for decades,
“The President sees this as a means of rectifying declining growth and manufacturing in the US. He has calculated that the EU currently imposes 39 per cent tariffs on US imports into the EU – how that has been calculated remains to be seen but he mentioned a number of items including VAT and other non-financial barriers.
“As VAT is not a barrier and is applied equally on EU and non-EU suppliers, it may be the case that the EU tariffs calculated by President Trump is overstated.
“That said, 20 per cent tariffs on all goods into the US is going to have a significant impact on EU. The retaliation by the EU, which is expected to follow, may result in a trade war not seen in decades.”
However, Taoiseach Michael Martin said “EU unity is crucial” and any response should be “proportionate”.
He said: “EU unity is crucial, and our response should be considered and measured.
“Any action should be proportionate, aimed at defending the interests of our businesses, workers and citizens.
If you don’t retaliate, this is the high watermark”.
US Treasury Secretary Scott Bessent
He continued: “Now is a time for dialogue, and I believe that a negotiated way forward is the only sensible one.”
“A confrontation is in no one’s interests. Ireland will be a strong advocate for an outcome which enhances the existing and strong transatlantic trading relationship.”
And Tanaiste Simon Harris added: “There are no winners when it comes to tariffs. They are bad for consumers, put jobs at risk, and drive up costs and uncertainty for business.”
He said: “As we have been doing all along, we will seek to control what we can control and influence what we can influence while drawing on unity with our EU partners as our greatest strength.”
US Treasury Secretary Scott Bessent has warned countries not to respond to Trump’s latest tariffs to avoid “escalation”.
He told Fox News: “My advice to every country right now is, do not retaliate.
“Sit back, take it in, let’s see how it goes. Because if you retaliate, there will be escalation. If you don’t retaliate, this is the high watermark.”
The EU Foreign Affairs Council on Trade is set to meet on Monday.
