News Reporter Juan Carlos Luque López analyses the recent declarations of Minister for Finance Paschal Donohoe and the role of Ireland in a possible trade war between the US and Europe.

By Juan Carlos Luque López | Mar 3 2025

On February 13, Minister for Finance Paschal Donohoe publicly expressed his discontent with American President Donald Trump’s repeated threats on imposing new and higher tariffs on EU exports, assuring that the Irish Government will use its special diplomatic relationship with the US to talk down a trade war. 

The Fine Gael minister claimed that “the Irish message is the other side of the coin of the European message,” suggesting that the Irish Government shares the European Commission’s view that President Trump's proposed “reciprocal” trade policy is “economically counterproductive” and “a step in the wrong direction,” while implying that Ireland will collaborate with the EU in avoiding that path. However, he also affirmed that in case the US and the EU go down the route of the application of tariffs, Europe will need to “respond back.”

Trump’s “Fair and Reciprocal Plan” for tariffs, whose first measure is expected to be the application of 25% duties on all US steel and aluminium imports, comes from the idea that the US has been “treated unfairly” by the European Union. The US President has repeatedly accused the EU of being “absolutely brutal” in its trade ties with Washington due to its high tariffs on goods imported from the US and “unfair, discriminatory or extraterritorial” taxes. 

The truth is that, although there exists an economic imbalance in goods trade between the US and the EU, with the EU enjoying an important surplus in its dealings with the US, the roles are swapped in the trade of services. Furthermore, the tariff percentage, which varies from product to product, isn’t always more favourable to the EU than to the US, and many of the taxes that Trump complains about, such as Value-added tax (VAT), also apply to European manufacturers. 

Among EU countries, Ireland could face the biggest impact if Trump extends his tariffs. The economic, historical and cultural linkages that have always characterised the so-called “special relationship” between the two countries could now make Ireland vulnerable to the dawning of a trade war. The US is positioned as the number one country in terms of acquiring Irish exported goods and Ireland benefits from a large surplus in its trade relationships with America, numbers that could be negatively affected by the US imposition of tariffs. The toughest blow could come to the pharmaceutical industry, as Trump has already suggested that “reciprocal tariffs” on pharmaceuticals will be established in the following months.

As a first initiative of the Irish Government to approach the US Government, nine ministers, including Taoiseach Micheál Martin and Tánaiste and Minister for Foreign Affairs Simon Harris, will be travelling to the US for St Patrick’s Day. Mr Martin has yet to receive a formal invitation from the White House, but this is not considered unusual, so there is no indication that the traditional visit will not go ahead.