Trump tariffs ‘biggest threat to Irish economy in long time’

Leaders on both sides of the Irish border are bracing themselves for US President Donald Trump’s tariff announcement later, with the taoiseach (Irish prime minister) describing it as the most serious issue to face his country’s economy “in a long time”.

Micheál Martin said it was clear the scale of the tariffs would be “very significant in European terms”.

Meanwhile Prime Minister Keir Starmer said the UK government is “looking carefully” at the prospect of any retaliatory tariffs the EU may announce in response to the tariffs, and the impact they might have in Northern Ireland.

Sir Keir said No 10 would be “calm and pragmatic” and keep in mind concerns in Northern Ireland.

The prime minister was asked by Democratic Unionist Party (DUP) leader Gavin Robinson if the government was prepared to take steps to exempt Northern Ireland from any possible EU actions that could follow the tariff announcements in Washington DC.

“Northern Ireland will be at the forefront of all our decisions,” he told the House of Commons.

Robinson later urged Sir Keir to “stand up for Northern Ireland”.

He said the prime minister needs to “recognise that our unique position may require specific support from the government if we become victims of EU retaliatory trade actions”.

The UK government has been trying to negotiate an exemption but now expects that tariffs will be imposed on UK goods.

Tariffs are effectively taxes applied to goods imported from other countries.

Governments impose tariffs in the hope of protecting local manufacturers from international competition.

Northern Ireland sold goods worth about £1.3bn to the US in 2023, with a concentration in pharmaceuticals and industrial machinery.

Ulster University economist Esmond Birnie has estimated that tariffs of 20% on Northern Ireland goods entering the US could cost local businesses at least £100m in lost sales.

Ulster University economist Esmond Birnie has estimated that tariffs of 20% on Northern Ireland goods entering the US could cost local businesses a “direct and narrow” impact of at least £100m in lost sales.

He said second and third round effects, such as an overall reduction in global trade, could push the overall negative impact up to between £200m and £300m.

He added that even a drop of £100m could still have a significant impact on overall economic performance.

“It is only about 0.2% of Northern Ireland’s overall GDP, which is about £50bn,” he said.

“However, if Northern Ireland’s growth in GDP this year is well under 1% – and this is quite likely – that would be equivalent to a quarter of economic growth.”

by John Campbell, BBC News NI economics editor

We shouldn’t expect that exports to the US from Northern Ireland will collapse, because very often when you’re a manufacturer competing on a global stage, you’re not doing that solely on price.

It’s not like there’s a load of American companies who can immediately substitute what you’re doing at a cheaper rate.

What you’re probably likely to see is the volume of goods that might be sold into the US will decline just because they get more expensive.

There is also a Windsor Framework element to this – not on the export side because Northern Ireland goods going into the US are just UK goods.

But goods coming into Northern Ireland have to meet EU rules, so you could have a situation where the UK doesn’t retaliate, doesn’t impose any tariffs on US goods, but the EU would retaliate.

In that circumstance, US goods entering Northern Ireland would have to pay the EU tariffs but US goods entering the rest of the UK would not have to pay the tariffs.

There is the possibility that Northern Ireland importers could get a rebate of the tariff if they can show that the goods are staying within Northern Ireland.

Stuart Anderson, from the NI Chamber of Commerce, said the US was a really important market and called on the UK government to “respond really, really clearly” after Wednesday’s announcement.

He added that could get “challenging” if the EU and UK respond differently.

Jim Nash, joint owner of the Wild Atlantic Distillery, near Castlederg, County Tyrone, said tariffs could be “catastrophic” for small producers like them.

The main target for their whiskey is the United States – according to the Irish Whiskey Association, exports of Irish drinks to the US are worth more than €800m (£669m) a year.

Mr Nash said he was not confident that being based in the UK would protect them from tariffs.

He said while “there might be a little bit of leeway because we’re part of the UK”, their product is labelled as Irish whiskey and that could cause issues when it goes through customs.

“The law is one thing but the implementation is another thing and it might be that it’s just a blanket ban and I wouldn’t be so confident that the UK will be able to escape these tariffs if they’re implemented as well.”

In the Dáil (Irish parliament), Taoiseach Micheál Martin signalled that the country was readying itself for the impact of President Trump’s tariff announcement later on Wednesday evening.

Mary Lou McDonald, Sinn Féin’s leader of the opposition, said that planned counter tariffs from the EU were “reckless” in response to Trump.

The taoiseach said that it was regrettable that Europe was now in a period of “increased protectionism” and urged the EU to be “strategic”‘ in regards to any counter measures.

US tariffs could have a more profound effect on the Republic of Ireland’s economy.

Among EU countries, Ireland is the most reliant on the US as an export market.

In 2024, almost a third of the country’s total exports were to the US – worth €73bn (£61bn).

President Trump has previously indicated his discontent with the scale of manufacturing by US pharmaceutical firms in Ireland.

Gareth Sheridan, chief executive of pharmaceutical firm Nutriband, said the global supply chain would be drastically affected if the tariffs go ahead.

He said his firm makes important drugs including chemotherapy treatments, antibiotics and pain medication in Ireland.

Mr Sheridan said a quarter of Americans had “foregone treatment” because of the cost and that could rise by 25%, becoming “an extreme burden on the patient”.

“If you have a 25% hike on chemotherapy and you can’t afford your treatment anymore what’s the alternative? Ultimately, people are going to die and they’re going to die because they can’t afford to live.”

On the street of Dublin, there was concern about the impending tariffs.

Matthew Butt said it made no sense that the United States were “attacking a country that’s worked very closely with them”.

“From our perspective it’s very tough because we have this huge export with Irish whiskey and lots of Irish cultural products that go out to the US and that’s going to be a huge blow to our economy.

“It’s very worrying.”

Sophia Matthews said he was “accidentally making an enemy of everyone that the US trades with”.