'It’s a very, very grave threat': Taoiseach says US tariffs could impact next year's budget
Taoiseach Micheál Martin said tariffs 'could very well' impact on budgetary decisions later this year.
The Taoiseach has said the introduction of tariffs by the United States could have knock-on effects for Ireland's budget in October.
Micheál Martin said the “overriding objective” of the Government was to protect Irish jobs, as US president Donald Trump prepares to announce widespread tariffs on the EU this coming Wednesday.
“The entire world will suffer from tariffs and a move to protectionism,” Mr Martin said, speaking on Newstalk.
“It’s also slowing down investment because many companies are deciding not to invest at the moment with all of the uncertainty.
“It’s a very, very grave threat, it’s a serious threat.”
The Taoiseach said companies did not have certainty at the moment, and this was leading to investment decisions being suspended.
He added the EU would not make a “knee-jerk” reaction to US tariffs, but outline its general position on Thursday.
It is expected tariffs will be universal across all European exports to the US and could be in the region of 20%. There is also an expectation there will be further tariffs on key sectors, including pharmaceuticals.
Mr Martin said tariffs “could very well” impact on budgetary decisions later this year, but the Government would need to assess that.
He said the focus in October’s budget would be on capital spending, citing the need to invest in infrastructure like water, housing and the electricity grid.
“We do have to try and preserve space for capital investment in those sectors that will improve the productivity of the economy into the future,” Mr Martin said.
Meanwhile, Tánaiste Simon Harris will on Monday speak to a number of EU foreign ministers to discuss tariffs, while coalition leaders are to meet later on Monday evening.
Speaking on Newstalk, Mr Harris said the world was preparing to enter a period of “extraordinary economic turbulence”.
“What we need to do in the days ahead is stay calm, stay measured, work at a European level and be strategic and coordinate in how we respond because tariffs are not good for anybody,” Mr Harris said.
“I think the laws of economic gravity will prove that.”
Mr Harris said he understood the view of the Trump administration wanting to bring US companies home, but it “misses a number of realities”.
“We live in a very globalised world and actually a lot of what we’re producing in Europe is actually going back to American factories for value added,” Mr Harris said.
“Pharma companies based in Ireland are paying royalties to the United States.”
Mr Harris said the goal was to get the US to the negotiating table and to secure a new agreement on trade.
“In any negotiation and in any engagement around trade policy, there should never be winners and losers in negotiations. Everyone needs to feel that they get a fair outcome,” Mr Harris said.
“The European Union wants to do more trade with the United States. We want to buy more products from the United States. We want to do things that are good for the US economy as well as the EU economy.”
However, Mr Harris said there was a need for “clarity and certainty” and all countries had heard so far was “rhetoric”.
He said that, during his call with US commerce secretary Howard Lutnick, there must be a grace period where negotiations can take place.
Later this week, the Government is due to convene its trade forum to take soundings from sectoral interests over the tariff threat.
