Economy at risk as US tariffs threaten growth, jobs, and inflation, warns Donohoe
Finance minister Paschal Donohoe at the launch of the North East Inner City Initiative's 2024 progress report and Strategic plan 2024-2027 in Sheriff Street Dublin. Picture: Stephen Collins/Collins Photos
The introduction of widespread tariffs on the European Union could lead to a rise in inflation, the finance minister has warned.
Paschal Donohoe has cautioned that US tariffs would have a negative effect on the Irish economy, including an impact on growth and job creation.
“Any economic impact of tariffs is bad for Ireland, is bad for Europe but is also bad for global trade,” Mr Donohoe said.
Mr Donohoe said that the scale of the economic impact would depend on the scale of tariffs implemented by US president Donald Trump.
Speaking as he arrived at the European Council, Mr Donohoe indicated that the ESRI would be publishing research shortly on the matter, which sets out that the biggest impact would be in the medium term.
“But any impact is going to be bad. Be bad for jobs, bad for growth and it could be bad for inflation,” Mr Donohoe said.
“There’s little doubt at all that moving into a phase in which tariffs are applied across the world will be harmful and will be difficult for economic growth.”
The finance minister said that while uncertainty around tariffs would have an economic impact if it continued into the long term, he expected that uncertainty to “come to an end in the coming weeks”.
He added that a general decline in confidence regarding how countries trade with one another would be “very corrosive to growing jobs and growing living standards in the time ahead”.
Mr Donohoe said that a “gradual loss of confidence” in the way countries deal with one another will impact on the global economy.
However, he said: “I am as convinced as ever that the best way of Ireland approaching all of those challenges is through the European Union.”
On retaliatory measures, Mr Donohoe said that Europe “will have to respond back proportionately and firmly” to US trade tariffs.
Asked about the possibility of pharmaceutical firms opting to leave Ireland, Mr Donohoe said that he expects companies to continue to invest while also increasing their presence in the US.
He said that tax revenues in all countries would be impacted by new barriers to trade, while adding that he wanted to see work done towards an agreement between the EU and US.
“But at the same time, the period that we’re now moving into is going to be volatile and we’ll have to work closely here within the EU to protect what we can but also respond back to developments that will come out soon.”
Mr Donohoe's comments were echoed somewhat by the Tánaiste in the Dáil on Thursday afternoon.
Simon Harris said that Ireland is likely to face a very significant period of turbulence in the face of threatened tariffs by Mr Trump.
Mr Harris made the remarks in response to queries from Labour leader Ivana Bacik, who said the Government must provide “clarity” about how its plans to deal with US tariffs.
Speaking in the Dail, Mr Harris said: “We are highly likely to face a very significant period of turbulence.
"We have got to control what we can control in terms of what we can do here in Ireland.
“We have got to work as part of and as members of the European Union where, of course, trade policy is at.” He added that many US companies have decades of experience carrying out their business in Ireland.
“We are also, though, approaching a position of relative strength because regardless of politics, there is also a reality that many companies are based in this country not for the weather, but because it is a good place to do business. It is a good place to access the European market.
“Regardless of who is in the White House or what policies are pursued, it is a statement of fact that many American multinationals still want to do business in a market with more than 400 million people.”
