Impact of Trump tariffs will mean hit to demand for Irish exports
With a third of Irish goods exports going to the US, the new tariffs could yield a hit to demand for Irish exports from the US
Print7 April 2025
The impact of tariffs announced by US president Donald Trump is set to be a sharp fall in US trade and could generate higher inflation for US consumers. This is according to AIB chief economist David McNamara.
In total, the US accounts for 32% of total Irish goods exports, with the EU at 40% and the UK at 10%.
“Overnight President Trump announced blanket tariffs which he claims are matching “reciprocal tariffs” and non-tariff barriers levied on the US. The baseline global tariff is to be set at 10% (including the UK), with higher rates for certain countries/regions, including the EU at 20% and China at 34%. The initial market reaction is negative with global stock markets lower,” explains McNamara.
Possible impact
While the initial plans may yet be changed post trade negotiations, the impact is set to be a sharp fall in US trade and could generate higher inflation for US consumers McNamara highlighted.
“With a third of Irish goods exports going to the US, the tariff could yield a hit to demand for Irish exports from the US. Notably for Ireland, the White House communication indicates that pharmaceuticals will be excluded from this round of tariffs. This gives a reprieve for now, given the importance of the sector in Ireland’s export mix, but the threat of future tariffs will add to the uncertainty,” he added.
“It remains unclear how the increased costs will distribute between US consumers and Irish-based producers, depending on the elasticity of demand and currency movements. Given the ‘necessity’ status of pharma products – our main export to the US, a more limited impact might be expected if tariffs are eventually levied here, particularly given the long-lead in times for firms to potentially shift production to the US – a stated goal of President Trump.
“However, the imposition of tariffs is an anchor on global trade and will likely be a drag on manufacturing output and GDP growth in Ireland, and to a lesser extent on the labour market and domestic demand,” McNamara said.
Recent forecasts
In the recent forecasts by the ESRI modified domestic demand (MDD) to set to increase by 3% in 2025 and 2.8% in 2026. In its alternative scenario, which assumes 25% bilateral tariffs between the US and the EU for goods trade, MDD growth is forecast to be 2.8% in 2025 and 2.1% in 2026.
In 2024, Ireland’s goods exports to the US were c.€73 billion (CSO Trade Statistics), of which 80% was in the pharmaceuticals sector. Ireland accounts for about a fifth of total US pharma imports.
Read more: Taoiseach ‘deeply regrets US decision to impose 20% tariffs’
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