Gabi Svobutaite

US President Donald Trump has roused global economic uncertainty with the announcement of  “reciprocal tariffs” targeting several countries, including Ireland. 

Ireland’s position as a small, open economy means that we are largely affected by fiscal  developments in the US, the world’s largest economy. Exposure to global  macroeconomic disruptions is further amplified by Ireland’s dependence on the US as both an export market and on US foreign direct investment (FDI). With an astounding €73bn of Irish goods, totaling to almost a third of the country’s aggregate exports having been distributed to the US in 2024, Ireland is forecasted to be among the hardest hit countries after President Trump’s new round of tariffs earlier last week. But what exactly could this mean for Ireland, and which sectors  can we expect to see bearing the largest brunt of these trade policies? 

Tariffs: Why These Tools of International Trade Matter

Simply put, tariffs are taxes imposed on goods being imported from one country to another. Such  taxes are applied to the importer and are calculated as a percentage of the total value of the goods  in question. The aim of tariffs is to encourage corporations within a country to source their  materials and labor domestically, rather than relying on international aid.  

Our Taoiseach, Micheál Martin has expressed a fear of the rise of US tariffs as being “a very  grave and serious threat”. Additionally, a joint analysis of the situation by Ireland’s Department  of Finance and the ESRI Irish Think Tank pointed to a potential loss of approximately €18bn in  trade for Ireland as a direct result of these tariffs. This analysis also suggested that a prolonged  trade conflict between the EU and US may endanger Ireland’s public finances.  

Since Ireland is a key financial hub in Europe, with many US-based financial institutions having  put down roots in Dublin, any tariffs affecting the financial services sector such as limitations on  US institutions offering services in the EU can harm Ireland’s finances. Furthermore, trade  barriers, or at least shifts in international trade patterns caused by Trump’s tariffs, will likely lead  to market volatility and increased costs for Irish businesses, creating a knock-on effect on  Ireland’s financial services landscape. This is likely to manifest through fluctuations in the value  of the euro or Irish stocks. 

Brexit and Trump: Double Trouble

One potential upside of the recent US tariffs in relation to Ireland’s financial services industry,  however, is the possible benefit from some companies shifting operations from the UK to Ireland 

post-Brexit, as the EU-US monetary relationship becomes increasingly complicated. An action  like this one could be extremely beneficial given the compounded difficulty of Trump’s new  tariffs and our closest neighbor being outside of the EU. To put it plainly, Ireland’s trade with the  UK and US could now face dual barriers; if the US imposes tariffs on products entering from the EU, Irish products that pass through the UK before heading to the US might face additional tariffs, increasing costs and reducing competitiveness. 

Key Sectors at Stake

A whopping 20% blanket tariff has been imposed on Ireland, covering key export areas of  aluminum and steel, foreign-made cars and most regrettably, Irish whiskey and dairy products.  The Irish Whiskey Association has cautioned that such tariffs are likely to leave long-lasting and  severe effects on the Irish drinks industry, with the US accounting for a remarkable 41% of  aggregate Irish drink exports, valued at €865 million annually. The association furthermore  emphasized a noteworthy growth of 450% in the joint EU and US spirits sector under a tariff free system between the years of 1997 and 2018. Taoiseach Micheál Martin has expressed his  disappointment in such developments, quoting that there was “no justification” for such tariffs  and that Ireland will now take combined action with the EU to determine steps moving forward. 

Pharma Under Pressure

Another Irish industry hanging in the balance of a budding trade war is pharma. With President  Trump yet again singling out the Irish pharmaceutical industry as prey for his tariffs, stating that  “all of a sudden Ireland has our pharmaceutical companies, this beautiful island of five million  people has got the entire US pharmaceutical industry in its grasp”. It is of utmost importance that  Ireland establishes domestic policies to increase competitiveness such as infrastructure investments, helping Irish pharma companies to diversify into new markets. In 2023, the US  consumed around €36bn of Irish pharmaceutical and chemical product exports, showcasing  Ireland’s role as a key offshore manufacturing hub for US pharmaceutical companies. Although  pharma products have thus far been excluded from Trump’s “Liberation Day” tariff  announcement, it may likely be a temporary reprieve. The threat of a global trade war still holds  strong, and the EU and its Asian comrades prepare countermeasures in the likely event that  negotiations are unsuccessful.  

Moving Forward

President Trump’s recent tariffs likely signal the start of a prolonged period of economic  uncertainty surrounding international trade and tariff policies, an issue of a multi-continental  degree. Conor O’Toole, a researcher at the ESRI Irish Think Tank states that “while the Irish  economy entered 2025 in a relatively positive position, the outlook is clouded by international 

developments. Changes in US tariffs and policy will have a notable impact on Ireland and could  hurt key sectors such as pharmaceuticals.” While we do not yet know the full extent of what  Trump’s tariffs mean for the Irish economy, we can be sure that impacts will partly depend on  proceeding responses from UK and European governments. It is imperative that leaders remain  level-headed in the near term, making sure that the various complexities and results of the  upcoming bilateral negotiations are considered in any medium to long-term trade and investment  decisions made by Irish companies and the government alike.