Trump’s 'Liberation Day': EU ready to retaliate to US tariffs 'if necessary'

Here, the Government has warned that promised tax cuts may not be possible if the economy takes a significant hit from the threatened tariffs on Ireland’s highly lucrative pharma sector.

Tánaiste Simon Harris has said exports of pharmaceutical products from Ireland to the US could halve if the US president presses ahead with his threats.

Asked if the public should be prepared for a recession, finance minister Paschal Donohoe said it is “difficult to identify” the scenario Ireland is heading into after tariffs are announced.

I do believe it is very likely that we will experience an economic challenge in the next number of years, but, on the basis of what I currently know, I believe it’s most likely that will lead to a lower level of economic growth, with a risk in relation to how many new jobs could be created, or some lost, and that will happen over the next two to four years.

Mr Donohoe said further tax reductions may need to be assessed in the context of October’s budget.

In the Dáil, Taoiseach Micheál Martin said Europe “wants negotiation” and wants to avoid a trade war with the US, but warned that the changes will mean a “pause in investment” from large multinational companies.

“That, in itself, will have a dampening effect on economic growth, not just globally but across Europe, including in Ireland,” said Mr Martin. 

“It is clear from what we understand so far that we are looking at a universal applicability of tariffs in terms of countries and in terms of goods.”

Tánaiste Simon Harris is due to speak with a number of his EU counterparts today and tomorrow as he moves to create an alliance between countries that would be equally impacted by pharmaceutical tariffs.

A total of 12 countries, 10 in the EU, along with Switzerland and Britain, are particularly vulnerable to such tariffs on the pharma sector.

While EU leaders have been bracing themselves for the announcement, European Commission president Ursula von der Leyen said “Europe has not started this confrontation” but is ready to respond. She said:

We do not necessarily want to retaliate, but if it is necessary we have a strong plan to retaliate and we will use it.

Without giving away details of retaliatory actions being worked up, Ms von der Leyen said: “Europe holds a lot of cards — from trade to technology to the size of our market. But this strength is also built on our readiness to take firm countermeasures if necessary.”

A meeting of the Government’s trade forum will be held on Friday with a particular focus on pharma.

The coalition leaders will also attend a briefing with the Labour Employer Economic Forum, the membership of which includes employers and trade unions.

It is expected that an initial formal response to US tariff announcement will be made when trade ministers gather in Luxemburg on Sunday and Monday, a meeting which Mr Harris is attending.