TRUMP AND IRELAND

Ireland's merchandise trade surplus of €50 billion will feature on the Trumpian agenda.

It has long been feared that Trump’s second presidency would be more extreme than his first and that it would be characterised by chaos, volatility and uncertainty. Less than a month in I think it is safe to say that on all fronts the situation is evolving in a more dramatic way than could have been imagined. The images of Elon Musk in the Oval Office with young X on his shoulders postulating on waste and fraud in the US public sector bureaucracy is quite astounding, but so much has happened over the past month that it is difficult to keep up with events.

From a global economic and trade perspective the narrative so far has been dominated by the promise and threat of trade tariffs. Earlier last week he announced a 25 per cent tariff on all steel and aluminium imports into the US applicable from March 4^th. It remains to be seen if such tariffs will apply to goods that use a lot of steel and aluminium, such as cars.

In terms of total global steel production, the World Steel Association estimates that China accounts for 53.9 per cent of global steel production; India is in second place at 7.4 per cent; and the EU accounts for 6.7 per cent. It is estimated that 18 million tonnes of steel are exported into the US, with 3.7 million tonnes or 20 per cent coming from the EU. Canada, Brazil and Mexico supply around 49 per cent, and China less than 2 per cent.

From an Irish perspective it is far from clear how the proposed tariffs might affect our economy. Ireland is a tiny steel producer and does not appear in the top 50 global league table. In a direct sense Ireland will not be affected by US tariffs. At an EU level, the loss of a 3.7 million tonnes market to the US would do serious damage to an already struggling and contracting EU steel sector. With the US market set to become much more difficult it is probable that countries such as China and Indonesia will seek to sell more into the EU market and compete directly with more expensive EU production. Perhaps, Ireland might benefit from increased cheaper steel supply, but that remains to be seen.

At a more general level it seems certain that very few countries will escape the wrath or attention of President Trump. South Africa has come in for some harsh treatment ostensibly because of land seizures from Afrikaners, but there must be a deep suspicion that South Africa may be suffering because it took a case against Israel to the International Court of Justice (ICJ). Ireland did likewise and is also now trying to legislate for the Occupied Territories bill. These facts alone would raise the ire of a president who is on obviously good terms with Netanyahu.

However, Ireland is also running a significant merchandise trade surplus with the US, which stood at €50 billion in 2024. 80.3 per cent of Ireland’s exports to the US were accounted for by the Chemical and Pharmaceutical sector. The US accounted for 32.5 per cent of total merchandise exports. These trade statistics alone have the potential to single Ireland out in the strange mind of President Trump.

Whatever way we look at it, Ireland is now in a position of considerable vulnerability. Our inordinate dependence on US multi-national investment should be a cause for concern for every politician and business leader in the country. Ireland has a very heavy dependence on US multi-nationals in terms of direct and indirect employment, and more particularly and worryingly, income tax and corporation tax receipts.

The key concentration risks for Ireland include 302,566 employees in IDA companies at the end of 2024; corporation tax accounted for 36.2 per cent of tax revenues in 2024; 10 Companies paid 52 per cent of Corporation Tax in 2023; three sectors - Manufacturing, ICT & Finance - accounted for 70 per cent of corporation tax and these 3 sectors accounted for a third of income tax; the top 10 companies accounted for 10 per cent of income tax; the top 20 per cent of income tax payers pay 80 per cent of income tax; and the Chemical & Pharmaceutical sector accounted for 65.2 per cent of merchandise exports in 2024.

I could go on, but the message is clear – Ireland is seriously exposed to the vagaries and unpredictability of Trump. We need to move on from the petty squabbling in the Dáil and address areas of national competitiveness such as energy, water and housing as a matter of extreme urgency, and stop wasting fiscal resources on populist policies.