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LAST UPDATE | 21 Mar
A NEW PAPER published today by the Economic and Social Research Institute (ESRI) outlines the potential impacts of protectionist economic policies coming from the United States.
With President Donald Trump threatening sweeping tariffs on goods imported from the European Union, the ESRI has said those levies would have a significant negative impact on the Irish economy.
The Central Bank issued the same warning in its first bulletin of the year, and cautioned that the threat of tariffs “presents a very different landscape for the Irish economy” than has existed in recent years.
Trump has already imposed tariffs on US neighbours Canada and Mexico, as well as China. The US has also imposed a global 25% tariff on steel and aluminium.
During Taoiseach Micheál Martin’s visit to the White House last week, Trump said he didn’t want to “hurt” Ireland but that he would be imposing tariffs on the EU, of which Ireland is a part.
The ESRI paper focused on a number of different scenarios.
The first is the possibility that the US imposes tariffs of between 10 and 25% but the EU does not respond. The second scenario assessed is one in which the US and EU engage in a tit-for-tat trade war.
The tariff scenarios considered in the paper “could lead to the levels of Gross Domestic Product (GDP) and Modified Domestic Demand (MDD) falling by as much as 3.5% and 2% below the no-tariff baseline respectively over the next 5 to 7 years,” the ESRI said.
The third contingency is that the US could impose a 10% increase to the cost of imports through regulatory changes.
The imposition of non-tariff barriers from the US to the rest of the world would also have “a significant negative impact on the Irish economy”, the ESRI said.
Those impacts could see the levels of GDP and MDD falling by as much as 3% and 1.5% respectively over the next 5 to 7 years, according to the paper.
The report also suggests that the trade sector would be most at risk of sustaining damage due to US protectionism.
“The results show that the level of production in the traded sector falls by as much as 4% from the no-protectionist policy baseline over the next 5 to 7 years. This is compared to a 2% fall in domestic sector production for the same scenario,” the paper warned.
Those impacts would have wider negative implications for the Irish economy as a whole, the ESRI said.
“Our research shows that protectionist policies have the potential to significantly impact the Irish economy, with the traded sector disproportionately affected,” said Dr Paul Egan, an author of the working paper and a research officer at the ESRI.
“This, in turn, would lead to a significant impact on the labour market, consumption and the domestic economy as a whole,” he said.
“Protectionist policies may also prompt multinationals to relocate to the US, posing further risks to the Irish economy and public finances.”
Finally, the paper states that if US protectionist measures target specific sectors that are important to the Irish economy, “this could lead to a greater decline in the traded sector, and consequently, the economy as a whole”.
“This would likely be even more severe than our scenario analysis suggests.”
A Department of Finance spokesperson today acknowledged that “trade policy uncertainty is exceptionally high” due to the prospect of tariffs .
The spokesperson noted that several scenarios are modelled in the ESRI report but added that the report does not account for changes to the “firm and sector-specific factors that have produced windfall corporation tax receipts in recent years”.
“As a result, the impact of an escalation in protectionism on the public finances may be higher than is estimated in the paper,” said the spokesperson.
Commenting on the report, Finance Minister Pascal Donohoe said there are “unprecedented levels of uncertainty regarding the global trade architecture” and the “possibility of tariffs”.
He described the ESRI report as “one piece of the analytical jig-saw needed to chart a way forward”.
Donohoe said Ireland will “remain an outspoken advocate of free-trade policies” and that “government will continue to work to improve the enterprise climate in Ireland”.
“This includes ramping-up capital spending in key strategic areas, including energy, water, transport and housing,” said Donohoe.
“This is how we will remain competitive against a backdrop of heightened uncertainty.”
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Roll on April 2nd going to be an absolute bloodbath in the economy.
@Rian O’Sullivan: the US economy you mean: at the end of the day they are net importers. They don’t have the capacity to change that on short notice. A decade, maybe.
@John Moylan: Incorrect Irelands economics are a busted flush. President Trump will finish what’s left come April 2nd.
Thank God we’re governed by shrewd, forward thinking leaders who haven’t doubled government spending in the last decade, despite being in the throes of a supposed ‘boom’, and brought hundreds of thousands of state-dependent useless-eaters into the country! So at least we’re well cushioned for any downturn!
@Jonn: but they doubled their wages added more ministers NGO’s advisors and get themselves nice Khushi bonuses for doing nothing
McGregor did great, highlighting the absolute mess this government has turned our country into under EU orders, we are being replaced Daly by new deli imports
@087 bed: new deli? Where where? Chicken fillet rolls – Jambons!!…..As for CMcG isn’t Ireland a lucky nation. A man of integrity looking out for our wellbeing. Who’d have thought..
@087 bed:
Whatever your opinion on McGregor himself he’s speaking the truth,which is why the establishment are so desperate to play the man and not the ball! They’re terrified of McGregor because he’s rich enough and arrogant enough to speak his mind!
@Jonn: the majority of the electorate who are bothered to vote would simply never vote in McGregor. Just like we saw when far right candidates were rejected in the general election. The oireachtas are ignoring his bluster
@Jonn: McGregor is a born and bred liar and no one is terrified of the little smellbag.
@Jonn: when it comes to McGregor, surely it is appropriate to play the man and call out his long list of toxic behaviour? Whilst also of course calling out the BS that he spouted in the Whitehouse
@087 bed: judging by your vocabulary and spelling we obviously need more higher skilled people coming in to do critical jobs.
@Jonn: just another uneducated racist
@Ian: and what’s the difference with the politicians? Are they not born and bred Liars too as they have proved that to the Irish taxpayer for years and years
@087 bed: funny how we never hear about McGregor’s years on the dole training for MMA. Let’s talk about that.
@Ian:
Really? Since he started speaking out on immigration they’ve devoted a lot of time and energy to discrediting him,including a perfectly timed showtrial that got saturation media coverage! Looks to me like they’re pretty scared of him!
I thought we sent a swat team of ministers to the US for St Patrick’s day to offset this. I knew it was just a junket.
@Billy Meehan:
Guess who’s blocked, blocked again, yes he’s back, when will this end?
@KTH: It will end when The Journal care about what happens in the comments. They don’t.
@KTH: When he’s sectioned and in eh, secure accommodation. Nurse! The tranquiliser gun! Both barrells! Aim for the sock!
Most people delighted to see the Ukrainian accommodation reduced. Well when this takes effect all our home grown spongers going to be crying when their own benefits are diluted to make way for the previous tax payers entering the system for the first time.
We could be in for a rough ride here.
@Billy Meehan: And what about our home grown generational social welfare cowards who are afraid of hard work?
@Fiona Wyse: should be reduced forward to getting enough money from us already billions been wasted
@Fiona Wyse: 3.8% unemployment.
@Fiona Wyse: you realise “Billy Meehan” is a scrounger and sex offender, right?
@Billy Meehan: 76% of Ukrainians in Ireland are women, children and young adults under 20 years old. Furthermore, the age of miliary service in Ukraine is 25 to 60, thus approx. 10-15% of of Ukrainians in Ireland might be eligible for military service by virtue of their age, though it’s likely at least some are physically unfit for service. Thus 85-90% are are certainly not cowards.
https://www.cso.ie/en/releasesandpublications/fp/p-aui/arrivalsfromukraineinirelandseries14/
@David Jordan: Facts! Ugh. No!!!
@Fiona Wyse: Under Darwin’s theory those to slovenly to provide for themselves die off. Social Welfare has turned this on its head. Birth rates are lower amongst hard working citizens.
Oh dear we thought Trump was a “gowl” who wouldn’t get elected and then when he did wouldn’t put tariffs and if he did the Brussels bureaucrats would save us. Let’s keep these borders open and increase spending even more. Think of all the refugees who need new engines in their cars. Don’t be racist paddy!
@Emily Murphy:
Of course the Irish taxpayer should be paying to repair Ukrainian cars,and bring in their pets..what are you, a racist?
@Emily Murphy: another new profile by the resident gowl.
Reap what you sow. Pretty obvious stuff here
Don’t worry
You voted for failed politicians. Nothing can go wrong.
Golden eggs. One basket.
Only our successive governments to blame for not having a Plan B.
Only people worried about an economic downturn is the political establishment parties and their NGO/MSM business vulture pals with their orders from Berlin and Brussels not being carried out due to less money to throw away at their pet projects and scamigrants. Ordinary Irish people have been down this rocky road many a time and know how to survive.
@Ailbhe MacThomais: what are you on about..the politicians and business guys have money to ride out a depression.. ordinary Joe soaps don’t.. young couples need to be both working to pay massive mortgages..one losses their job they lose their house… simple.. Trump damaging our economy will hurt young people badly.. I assume you are not Irish or your just simple and don’t understand what damage unemployment causes..
Jesus H look at that damage that Orange Manbaby with Tiny Hands has done to the US and world capitalist system. Stocks, indices, growth projections falling like stones down a well. Investors and savers are going to decimate this guy and his friends politically as payback.
@Luas Vuitton – Penneys Drag Queen: Only proves it’s a concept-based system, like the three little piglets’ hut made of straw.
Mehole licking up to the crying lying orange thing ,was nauseating, but is it time to tell our American cousins, Stay away if you voted for that orange piece of , whatever
@Robert Halvey:
The TDS is strong in this one!
@Robert Halvey: ‘Mehole’??? Grow up.
@Jonn: projection is strong in magrats
@Me Me: ‘Mehole’ That’s the best that these bottom feeders that have made a very bad bed for themselves can come up with….Everything is everyone else’s fault(especially the governments)
@Robert Halvey: what a childish comment
@John Paul: if war breaks out between Europe and the USa which side will you be on
If its gonna hurt anyway Trump plays it then might as well give some hurt back. It might make him reconsider?
@peter willekens: Like Putin, Trump is insulated from financial impacts of his pinball machine policies. The only thing that will make him reconsider is loss of support from his drooling supporters. He thinks purely in terms of ‘ratings’.
@Numinous20111: indeed, if his supporters start to realise that maga is costing them alot daily for at least a few years, if not longer before every American company in the world has relocated back home, (not gonna happen). Then they might even forcibly remove him in the near future. It would explain his increased grip on the military to avoid that scenario.
@peter willekens: Yes, his moves on the military hierarchy are transparent.
Do a deal with South American Countries.
@micheal duff: if we replace our current dependence on US pharmaceutical companies with pharma from Bolivia for example we run a pretty high risk of international sanctions and of being the centrepiece in a future Netflix series of Narcos.
@micheal duff: Considering the yanks where the ones that broke south American democracy, Shouldn’t they fix it
The Irish Left have been trying to get rid of US companies for decades. They should be cheering Trump but guess what……… ?
@thomas molloy: Left, right… is it not boring yet? (genuine question)
@Thesaltyurchin: Sadly nobody can define what precisely Left Right means as it serves as a media fudge and they can conflation to create baddies without doing into facts.
@thomas molloy: Yea, pretty fair assertion. Bile funds ads for Temu which sells us crap that we use for 20 minutes and send back… the circle of life ;)
How much did it cost in money and brain time to come up with this report which could be titled “Bleeding Obvious”
The shit is about to hit the fan and spread far and wide. Trumps No1 objective is to introduce Common sense Polices and MAGA. Our economy is very vulnerable to any Tarrifs imposed on the EU, and have all our eggs in the Multinational basket.
@James Doyle: Cutting off your nose to spite your face. Got it.
The real
Reason why everything is
Undermined is
Merely because of a dogmatic
Pontificater
“You have chosen to mute Billy Meehan comments.”
Protectionism is a failed ideology that has never worked. When Trump put on his first round of steel and aluminium tariffs back in 2018, they only protected 3,500 jobs and lost nearly 75,000 jobs. That’s because America uses more steel and aluminium that it produces so every business that used steel and aluminium parts saw their costs significantly increase. All the cronies in the EU Commission seem to think that you put out a fire by adding more fuel to it. They have behaved in a provocative manner which only validates Trump’s rhetoric that the EU engages in unfair trading practices. Take the recent spat with alcohol. The EU already slapped at 25% tariff on alcohol before Trump even took office. Now they’ve added another 50% tariff on whiskey because Trump mulled retaliatory tariffs.
@William Jennings: The 25% on US Whiskey were a response to the tariffs on steel and aluminium imposed by Trump in 2018. The additional tariffs are also linked to this dispute, announced way back in 2018 and in fact suspended until 31. March 2025 to facilitate negotiations with the US. Yesterday the EU announced that it will delay the introduction of the 50% tariffs you referred to, in oder to gain additional negotiation time after Trump himself threatened 200% tariffs on alcoholic beverages from the EU. Why do you make it sound like the EU started this? Apart from that I agree. Protectionism doesn’t work.
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