Irish Government's Warning
The Irish government has issued a stark warning that up to 80,000 jobs could be at risk if Donald Trump initiates a trade war with the EU. This figure represents nearly half of the workforce in Ireland's multinational sector, which is likely to be targeted by the US president as part of his strategy to repatriate jobs and taxes.
Impact on Job Creation
Finance Minister Paschal Donohoe indicated that in a worst-case scenario, between 50,000 and 80,000 jobs that would have been created or retained may not materialize.
Response to US Accusations
The Irish government has also countered claims from US Commerce Secretary Howard Lutnick that Ireland is involved in a “tax scam.” Peter Burke, Ireland’s enterprise minister, refuted Lutnick's remarks, emphasizing that Ireland has a transparent tax system and has led the OECD in revising tax agreements, increasing the corporate tax rate from 12.5% to 15%.
Trade Surplus and Deficit
Despite Lutnick's claims, official data shows that Ireland operated a trade deficit with the US amounting to nearly €93 billion last year, with a €70 billion surplus in goods but a €163 billion deficit in services.
Upcoming Tariffs
Trump has announced plans to introduce tariffs against the EU on April 2, which he has dubbed “liberation day.” During a recent meeting with Ireland’s Taoiseach, he specifically mentioned US pharmaceutical companies in Ireland, including Pfizer and Eli Lilly.
Broader Economic Implications
Experts suggest that potential tax changes in the US could be more damaging to Ireland's life sciences sector than tariffs, as companies are unlikely to shut down plants that take years to establish. Additionally, other industries, such as alcohol, may also face collateral damage from the tariffs, particularly with Trump threatening a 200% tariff on EU wines and champagnes in response to EU taxes on US whiskey imports.
Economic Forecast
A recent report from Ireland’s Economic and Social Research Institute predicts that the Irish economy could shrink by up to 3.7% in a worst-case trade war scenario.
Sinn Féin’s Pearse Doherty has expressed support for sectoral assistance for businesses that may be affected by the trade conflict.
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