Trump tariffs cause Ireland's economy to shrink for first time in two years

Yahoo

3 days ago

Ireland's economy has shrunk for the first time in almost two years after Donald Trump's tariff blitz sparked a sharp drop in corporate activity.
New trade figures show that Irish gross domestic product (GDP) shrank 1pc in the three months to June 30.
This was a marked slowdown from the previous quarter between January and March, when growth hit 7.4pc as companies accelerated exports to get ahead of the US president's 'liberation day' tariffs announcement on April 2.
After pausing his initial wave of tariffs, Mr Trump on Monday agreed a deal with Brussels that will slap a 15pc tax on EU exports to the US, threatening to deepen Ireland's economic slowdown further.
Simon Harris, Ireland's deputy prime minister, acknowledged that the 15pc tariff was 'regrettable', saying the government would have to assess its 'implications'.
Almost one third of Irish exports are shipped to the US, accounting for 12pc of GDP.
Pharmaceuticals, one of the most powerful engines of the Irish economy, account for more than 60pc of this, last year totalling €44bn (£39bn). The deal's impact on the sector remains unclear.
Mr Harris said the Irish government's understanding was that European drug makers would face a tariff of no more than 15pc, even if Mr Trump follows through on his threat of introducing higher worldwide pharma tariffs.
'The EU will continue to work with the US to underline the closely integrated nature of the EU and US pharmaceutical sector,' he said.
Mr Harris said the EU had also secured a 'zero for zero' tariff rate for the aviation industry and some agricultural products and chemicals.
But Irish business groups branded the US-EU trade deal a 'capitulation'.
'It's quite tragic that we are in this situation,' Danny McCoy, the chief executive of the Irish Business and Employers Confederation (Ibec), told Irish television. 'If Europe had equal strength, it could have confronted the United States.
'US businesses are now favoured coming into Europe without tariffs, and our European businesses are facing 15pc.'
Micheál Martin, the Taoiseach, sought to defend the deal, saying it had ensured that businesses had clarity and certainty, and would protect Irish jobs.
But former taoiseach and Brexit critic Leo Varadkar attacked the agreement, and questioned whether Mr Trump would stick with it.
'This will mean fewer EU exports to the US and higher prices for Americans,' he said on social media. 'The only thing it's better than is no deal at all and that's only if it sticks.'
Mr McCoy agreed with Mr Martin that businesses at least now knew where they stood.
'The good news, if there is good news on this, is that uncertainty may be dissipating and that's going to be important for people in business to make decisions,' he said.
But 'in time, this will lead to a lot of changes in terms of businesses having to look at different markets than the United States or suffer significant losses trading with the United States'.
Ibec urged the Irish government to support businesses that have to adjust to the new conditions.
Mr Martin said the government, which has been building up a pool of public funds to support industries through crises, would take time to weigh up the tariffs' impact.
'We will now study the detail of what has been agreed, including its implications for businesses exporting from Ireland to the US, and for different sectors operating here,' he said.
'The agreement is a framework and there will be more detail to be fleshed out in the weeks and months ahead.'
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