With Trump’s plan to introduce 25% tariffs on EU goods, Gráinne Glynn explains where Ireland could lie in the crossfire of a looming international trade war.
As Ireland prepares to face a potential global trade war, the implications of US tariffs on EU imports are becoming a significant concern. The recent announcement made by American President Donald Trump that he intends to impose a 25% tariff on EU goods, including steel, aluminium, and potentially pharmaceuticals, has sent shockwaves throughout the Irish economy, raising questions about trade stability and the potential impact on the cost of living.
Tariffs function as a tax on imported goods, increasing costs for businesses and, ultimately, consumers. When tariffs are imposed, companies exporting goods to the US must either absorb the increased costs, thereby reducing their profit, or more commonly, pass most of this extra cost onto consumers in the form of higher prices.
With Ireland’s economy faced with already high rates of inflation, these proposed tariffs could have drastic consequences. For Ireland, which exported €72 billion worth of goods to the US in 2024, of which €58 billion was in pharmaceuticals and chemicals, trade barriers with the US could be particularly damaging.
If the Irish pharmaceutical sector is hit, the implications will extend beyond corporate earnings to job security, investment, and consumer prices. Pharmaceutical companies, which play a critical role in Ireland’s economy, may be forced to adjust their businesses, leading to potential job losses and wage deflation. Sectors like STEM and healthcare could also see a decrease in job opportunities. The uncertainty surrounding the tariffs adds to economic instability, impacting investment in Ireland.
If the Irish pharmaceutical sector is hit, the implications will extend beyond corporate earnings to job security, investment, and consumer prices.
Additionally, tariffs on Irish food and drink being exported to the US could reduce revenues for Irish producers, potentially leading to higher prices. Should the EU decide to impose retaliatory tariffs on US goods, imported American products in Ireland, such as electronics, vehicles, and agricultural goods, will therefore become more expensive. The inflationary impact would further strain household budgets, particularly at a time when consumers are already struggling to deal with rising energy and housing costs.
Faced with this challenge, the Irish government is taking proactive measures to mitigate the risks associated with US tariffs. A new Strategic Economic Advisory Panel has been established to strengthen Irish-American trade relations and to respond to adverse policy decisions.
Additionally, Minister for Enterprise Simon Harris is asking the Cabinet of Ministers to approve the immediate establishment of a separate Consultative Group on International Trade Policy to provide guidance on developing trade challenges. Ireland’s diplomatic strategy will focus on fostering the connection between Irish and American businesses.
The Irish Exporters Association has urged companies to begin assessing their supply chain vulnerabilities, highlighting that businesses cannot assume that Trump’s tariffs will not be implemented. The Irish government is also looking at strengthening its relationship with its other allies like Canada and China.
If Trump does go forward with these tariffs Ireland would be one of the most heavily affected countries in Europe, but likely not the worst affected overall. Other EU powers with a larger exportation market, particularly Germany, may carry a heavier burden. The US is Germany’s largest export market, and its key sectors of automobiles and machinery, which Trump has explicitly mentioned, are highly vulnerable. A 25% tariff on German cars would majorly threaten manufacturers like BMW, Volkswagen, and Mercedes-Benz, leading to job losses across the EU and high costs for cars and machinery.
If Trump does go forward with these tariffs Ireland would be one of the most heavily affected countries in Europe, but likely not the worst affected overall.
There would be a knock-on effect in Ireland if high tariffs were implemented on other EU members’ products. If Germany and France see reduced exports to the US, Ireland’s economy as a result would feel the shock of their economic decline. The EU is Ireland’s second largest trading partner after the US, so if major European economies weaken, Irish businesses could lose contracts, investments, and trade relations.
Many Irish companies also sell to the US indirectly via EU supply chains. If tariffs make EU exports less competitive in America, Irish businesses that supply them could lose customers. Similarly, if European factories experience closures or layoffs, fewer Irish graduate students may be able to find work abroad.
The proposed US tariffs present a challenge for Ireland, with potential ripple effects on the economy and the daily lives of its citizens. Students and young people, in particular, should stay up to date about these developments, as they may influence job markets and living costs. Even if Ireland isn’t directly targeted, tariffs on other EU countries will indirectly weaken the Irish economy by raising costs, increasing inflation, and threatening the job market.
Diplomatic efforts are starting to form as the unpredictability of Trump’s actions makes long-term planning difficult. The future remains uncertain, and so, resilience will be integral in the face of these obstacles.