What Trump means for Ireland
23 February 2025
The potential consequences of the second Trump presidency for the global economy are being calculated by governments across the world. Nowhere is this more so the case than in Ireland. Its dependence on US multinationals for economic growth and tax revenue make it uniquely vulnerable. Moreover, Trump officials have explicitly referenced the Irish state, in relation to its tax and trade policies, as an example of what they dislike about the current international economic framework.
They hold a belief that production capacity and tax revenue has been taken away from the United States. A major thrust of the MAGA project is to reverse this trend through the onshoring of US companies and the repatriation of their profits. The main tools that are to be used to achieve are the imposition of tariffs and the reform of the global tax system. In his short time in office Trump has already announced a raft of tariffs and also withdrawn US support for the OECD agreement that set an international minimal corporation tax rate of 15%. This agreement was particularly beneficial to Ireland and saw a surge of corporation revenue come into the state in recent years as companies moved money out of the most notorious tax havens. The Irish state was able to market itself as the respectable face of tax avoidance. Now Trump has thrown that up into the air.
Dependency
It is Ireland’s dependency on the US, in terms of trade and taxation, that makes it particularly vulnerable to any changes. The multinational sector makes up over 50% of Irish GDP. Ireland serves as a base for nearly 1,000 U.S. companies, including the European outposts of Apple, Google, Microsoft, Meta and Pfizer. US firms employ about 210,000 people in Ireland, which is around 11% of the workforce.
Tax
It is estimated that ten multinationals, most of which are US owned, account for 60% of Ireland’s corporate tax receipts. This base for that revenue is even more concentrated when we consider that just three companies paid €10bn (40%) of the total €23bn collected in corporation tax (according to figures for 2023). As well as corporation tax the multinational sector is also responsible for around one-third of payroll taxes and 40% of VAT payments. If these tax revenues were removed the Irish government would be running a deficit rather than a surplus.
Trade
US multinationals and the US market are also the main drivers of Irish trade. The US is the number one country for Irish goods exports, accounting for 30% of the total. In 2024, Irish exports to the US were valued at €72.6bn, compared with imports of just €20 billion; a surplus of £50bn. Some 80 per cent of these exports were pharmaceuticals and chemicals. That a 34% surge in exports to the US from the previous can largely be accounted for by sales of a new weight loss product from Eli Lily that is manufactured at a facility in County Cork illustrates the degree of dependency on this sector.
Trump has stated that he wants to move pharmaceuticals and chemicals businesses and their manufacturing jobs back to the US. This is easier said than done with companies that have made huge investments in facilities and staff. The use of tariffs in this case would be counterproductive as the US would be tariffing its own companies and pushing up prices for US customers (including the US government itself). However, there are other assets registered in Ireland, such as Intellectual Property, that are more mobile and could be transferred to the US.
Another element of Trump’s trade policy that could impact on the Irish economy is his stated desire for the EU to accept more US agricultural products. This could be very damaging to Ireland’s large agri-food sector.
While a lot of this is speculative the Trump administration, through its rhetoric and early actions, has made its intentions clear. It wants to force changes to global trade and taxation rules that it believes will be more favourable to the United States and to US corporations. We don’t know how far this agenda will advance but whatever its outworking the current status quo is unlikely to hold. That will inevitably have huge consequences for Ireland.
Irish response
While the Irish government has reaffirmed support for the EU in relation to trade it is also making efforts to reassure US corporations operating in Ireland and to placate the Trump administration. Two new advisory bodies to help the state respond to potential trade shocks are to be established. One of these will be a new US-based body - the Strategic Economic Advisory Panel - that is tasked with strengthening US-Irish relations. The panel, made up of influential professionals drawn from a range of business sectors operating in the United States, will advise on how to deal with potential policy changes brought about by the Trump administration. Another body - the Consultative Group on International Trade Policy - will facilitate dialogue with Irish based businesses that are engaged in international trade. This is essentially a two-pronged approach which involves lobbying of the US government and further support for US multinationals based in Ireland. The clear message is that the current set up is beneficial to US capital and that the Irish state will go even further if necessary. This is summarised in the declaration by the Minister for Foreign Affairs Simon Harris that: "We can do business with the Trump administration."
The Irish government has already made political moves to placate Trump, particularly around the issue of Palestine. These include the dropping of the Occupied Territories Bill and the adoption of the IHRA definition of anti-Semitism that could criminalise Palestine solidarity activity. Indeed, suppressing the pro-Palestine sentiment of the Irish people, will be part and parcel of doing business with the Trump administration. We see this operating in other countries through censorship of speech and attacks on the right to assembly. There is no reason to believe that Ireland will be exempt from this trend.
The so-called “diplomatic offensive” will soon be on full display as Irish political leaders decamp to the US for St Patrick’s celebrations where they will engage in the familiar praise singing and special pleading. They will all be at the White House raising their glasses to Trump, just as they did with Genocide Joe the previous year. Sinn Fein now say they will not attend, but this seems more a change of direction given their new role of being the opposition following their election defeat and the negative response of many members to their previous visit with Genocide Joe. Any genuine challenge to imperialism seems unlikely.
External shock
The Irish political class hope that by placating Trump they will be able to preserve Ireland’s economic model as a tax haven for US multinational companies. This might be correct and it could turn out that Trump is all bluster. But this is far from certain. In its early days the Trump administration has shown its willingness to impose tariffs and also use the threat of tariffs to force concessions from other states. It has also made threats against other trading blocs such BRICS and the EU. The ultimate aim is to dissolve these blocs so the US can exert more influence over individual states. Given its weakness and division following Brexit and the war in Ukraine the EU is a prime target. Will the collective will of the EU hold out under US pressure?
The Irish state would be in a very weak position if the EU was to dissolve. Many of the incentives for multinational companies locating in Ireland in terms of market access and taxation would be lost. Trade and tax policies would be imposed unilaterally by other powerful states. If the US wanted to repatriate profits of US multinational companies operating in Ireland or open up the Irish market to US agricultural products it could do so without resistance.
The above is a worst-case scenario. But even if the Trump administration were to make some progress along this path it would still have very serious consequences for Ireland’s economy and politics. The tax haven model which generates much of revenue for public spending would be gone; all the assumptions that underpin government policies, which are shared by every party from right to left, would be completely overturned. In terms of external shocks to hit the Irish state it would be on scale comparable to the financial crash of 2008. Yet despite this experience there is no evidence that the left and the trade union movement are any more prepared for the consequences, of another dramatic shift to austerity, that could impact the working class. Just like the Irish capitalist class they are hoping that things will somehow turn out for the best.