A new Economic and Social Research Institute (ESRI) paper published today outlines potentially severe economic consequences for Ireland if the United States implements protectionist trade policies. With President Donald Trump threatening sweeping tariffs on European Union imports, both the ESRI and Central Bank are sounding alarm bells about significant negative impacts on the Irish economy.
The ESRI research examined multiple scenarios, including the US imposing tariffs between 10-25% without EU retaliation, and a full-scale trade war with reciprocal tariffs between the US and EU. Under these scenarios, Ireland’s Gross Domestic Product (GDP) could fall by up to 3.5% below baseline projections over the next 5-7 years, while Modified Domestic Demand could drop by 2%.
Even non-tariff barriers, such as regulatory changes increasing import costs by 10%, would substantially harm the Irish economy, potentially reducing GDP by 3% over the same period.
According to The Journal, the report highlights that Ireland’s traded sector would bear the brunt of these protectionist policies, with production potentially falling by 4% compared to 2% in the domestic sector. Dr. Paul Egan, research officer at ESRI and paper co-author, warned these impacts would cascade through “the labour market, consumption and the domestic economy as a whole.”
Further risks include the potential relocation of multinationals to the US, endangering both the Irish economy and public finances. The ESRI cautions that if US measures specifically target sectors critical to Ireland’s economy, the damage could exceed their current projections.
Finance Minister Pascal Donohoe acknowledged the “unprecedented levels of uncertainty regarding the global trade architecture” and described the ESRI report as “one piece of the analytical jig-saw needed to chart a way forward.” He pledged that Ireland will “remain an outspoken advocate of free-trade policies” while working to “improve the enterprise climate” through increased capital spending in strategic areas like energy, water, transport, and housing.
During Taoiseach Micheál Martin’s recent White House visit, Trump stated he didn’t want to “hurt” Ireland but confirmed his intention to impose tariffs on the EU collectively.