A potential trade conflict between the US and the EU may severely impact Ireland, with a possible loss exceeding €18bn, significant job losses, and the potential for US multinationals to relocate operations, as suggested in an Irish government-co-authored report. The study by the Economic and Social Research Institute indicates that in the worst-case scenario, Ireland’s GDP could shrink by 3.7% over a period of five to seven years if Donald Trump were to impose 25% tariffs on all EU exports and if the EU were to retaliate with counter-tariffs.
The scenario of a Trump tariff imposition, even at a lower rate of 10% on all global imports, would still have a substantial negative impact, with Irish GDP projected to fall by 3.2% compared to a no-tariff scenario. The report states that almost all tariff scenarios would have a detrimental effect on the Irish economy, leading to both job losses and creating conditions that could prompt US multinationals to relocate to the US in response to protectionist policies.
Ireland stands as one of three EU countries with a positive balance in goods trade with the US, primarily benefiting from pharmaceutical exports, with companies such as Pfizer and Eli Lilly generating profits that are recorded in Ireland. However, this economic model is under threat by President Trump, who has accused Ireland of “stealing” jobs and investment.
During a recent meeting with the Irish Prime Minister at the Oval Office, Trump praised Ireland’s “smartness” yet suggested that the country has a stronghold on the entire pharmaceutical industry. Irish experts argue that the threat of a tightened tax policy could motivate pharmaceutical companies to shift their profit bookings to the US, rather than face tariff penalties.
The impact of trade barriers is likely to be felt not only in manufacturing sectors such as pharmaceuticals, medical devices, food production, and IT but also in the reduction of income tax revenues for the state. The decrease in GDP may reach €18.4bn based on last year’s figures, and such economic downturn could lead to inflation due to higher import costs.
Significant US imports to Ireland include aircraft (due to companies like Ryanair and Aercap), pharmaceuticals, machinery, and various other key products. The report’s author, Paul Egan, suggests that while his team can’t quantify the effects of uncertainty, the short-term volatility provoked by Trump’s threats could exacerbate these negative impacts.
Source: https://www.theguardian.com/world/2025/mar/21/us-eu-trade-war-tariffs-ireland-cost-report
