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For an open economy like Ireland, recent developments on trade have been especially concerning.
Having enjoyed decades during which global trade has increased, new markets have opened, and supply chains become ever more diverse and complex, we are entering a different era.
Ireland has supported and benefitted from a world order in which trade has become more open and globalised.
We now need to adjust to a different situation, one in which some are consciously stepping back from that.
The new policy approach in the United States is one in which the protection of national markets and the raising of protective barriers plays a central part.
Ireland rightly advocates for an ambitious world trade agenda. We believe trade not only brings economic benefits, it helps lift people and countries out of poverty, and it contributes to a more stable and predictable world.
Retreating behind defensive barriers may appear attractive on the face of it, but it is not a ‘win-lose’ proposition. Ultimately, everyone loses, and the poorest lose most of all.
That is why the announcements on tariffs made by the US administration on 2 April are so deeply concerning and regrettable.
They have had an immediate and negative impact in global financial markets, but the medium to long term consequences for the world economy will be grave indeed if solutions are not found.
A baseline tariff of 10% on all countries entered into force on 5 April with further tariffs coming into effect today.
This will mean a blanket 20% tariff on all exports from the EU, including Ireland, to the US from today.
While major tariff announcements were trailed in advance, and the Government has been actively preparing, we hoped that this harmful and destructive step could have been avoided.
These new tariffs are in addition to the decisions last month by the US to impose tariffs on steel, aluminium and derivative products, as well as on the automotive sector.
Together, the US tariffs on steel and aluminium, on cars and the blanket 20% tariff on goods from the EU affect around €380 billion of trade between the US and the EU.
There is no way to sugar-coat it.
A 20% per cent blanket tariff on most goods could potentially have a significant effect on Irish investment and the wider economy.
It represents a huge challenge to Irish exporters to the US across all sectors. We are already hearing from some who are seeing their orders from the US slowing or even drying up entirely, putting valuable and skilled jobs at risk.
And there may be more to come. We have yet to see the approach the US will take on pharmaceuticals, semi-conductors and other sectors excluded from the so-called reciprocal tariffs.
I hope the US will reflect carefully before taking any further steps – industries like pharma involve deeply complex and interconnected supply chains, as we saw clearly during the pandemic.
I have spoken to many leaders in the pharmaceutical sector in recent days to discuss how best we can navigate these very serious challenges.
I know how concerned they are – it is not a sector in which production can be turned on and off overnight.
As we have seen in Ireland, it involves exceptional expertise, long-term research and innovation; very significant investment in high-tech plants that can produce to exceptionally high standards; a skilled and dedicated workforce; and, most importantly, patients, people who cannot afford to see the price they pay soar or to have supply of vital medicines interrupted.
I hope that, having reflected, the US will step back from disrupting this most sensitive sector. I am sure that we can find a negotiated solution in which everyone wins.
Ceann Comhairle,
We see no justification for the imposition of tariffs on EU exports. Tariffs are counter-productive and deeply disruptive. They drive inflation, hurting consumers on all sides.
There will be no winners in this, least of all the US taxpayers who will bear the burden of higher costs.
As stated starkly by the President of the European Commission, Ursula von der Leyen: the global economy will massively suffer.
Uncertainty will spiral and trigger the rise of further protectionism. The consequences will be dire for millions of people around the globe, including the most vulnerable countries, now subject to some of the highest US tariffs.
I believe that the EU response to date has been the correct one.
As I agreed with President von der Leyen in our recent phone call, the EU will proceed in a calm, strategic and measured fashion. We will be continuing to seek negotiated solutions.
We are disappointed that we have reached this point, but it is always essential to continue dialogue and negotiation. There is always time to strike a fair deal.
This approach was endorsed by EU Trade Ministers at their meeting last Monday. There was a strong sense of unity and agreement that the EU should take the necessary steps to safeguard its interests.
All shared the view that this dispute requires dialogue and negotiation with the US.
At the same time, the EU will have to respond in a proportionate manner which protects our businesses and our citizens.
Today, based on a proposal from the Commission, EU Member States are considering a decision to proceed with counter balancing measures in relation to the US tariffs on steel and aluminium.
If agreed they will come into effect on a staggered basis, first on 15 April and then on 15 May. They will affect around €22 billion in trade between the EU and the US.
The Government has been in ongoing contact with the European Commission and has made Irish sensitivities clear.
I discussed these issues directly with President von der Leyen, raising our concerns on the potential inclusion of bourbon and dairy on the proposed lists of EU counter measures. The publication of the final lists will be for the Commission, but I am hopeful that the concerns of Ireland will be taken into account.
The EU is continuing to reflect on and prepare counter measures in relation to the tariffs announced by the US on 2 April. However, as I said, and as has been made clear by the Commission, the EU is also prioritising negotiation and dialogue with the US.
Should negotiations fail, it will be important to consider further counter measures by the EU that protects our businesses and our citizens.
Ongoing contact with the US and the Trump administration is crucial if we are convince the US to come to the negotiating table.
I raised our concerns about tariffs and their potential adverse impact on the two way and mutually beneficial economic relationship between Ireland and the US when I met President Trump in the Oval Office last month.
The Tánaiste had a useful phone call with US Secretary of Commerce, Howard Lutnick, on 24 March and is in Washington today to meet him in person.
The EU Trade Commissioner, Maros Šefčovič, is permanently engaged with his US counterparts.
Ceann Comhairle,
I know that there are also serious concerns, which I share, about how the US tariffs and EU countermeasures could impact Northern Ireland and the all-island economy.
The new tariffs announced by the US do not affect the UK in the same manner as they are subject to the baseline 10 per cent tariff.
This will have an impact on Northern Ireland and the Government is conscious of this. We are working through these issues and we will continue to be close contact with the Northern Ireland Executive.
There may be specific issues for the agrifood sector not least due to the integrated supply chains North and South in this industry, and the Customs ‘rules of origin’ which define the origin of a product for tariff purposes.
We learned a lot about this in the Brexit period so understand that supply chains on this island are deeply connected and that any change to current integrated arrangement would require huge investment.
Minister Heydon and his team are looking at the potential impacts on the agricultural sector in more detail.
The Windsor Framework does offer some protections.
Arrangements are in place that allow Northern Ireland traders to apply to the UK authorities to be reimbursed in respect of EU import duty paid or deferred on goods brought into Northern Ireland and that do not enter the single market.
But the impact of the new tariffs is wider than any one sector and will potentially impact all goods being exported, North and South, in different ways.
We are very aware of this and we will continue to highlight the particular situation of Northern Ireland and, more broadly, the all-island economy in all our discussions with interlocutors, including the US and the European Commission.
Ceann Comhairle,
While the challenge we, and our European partners, now face, is not to be underestimated, we are taking this on from a position of strength.
Our economic performance in recent years has been robust, we have near full employment.
We have seen real, substantive, jobs growth across all regions.
This economic success has been based on an openness to trade and investment with all countries – an approach we must continue to be advocate for, including by calling for an ambitious EU trade agenda.
Ireland remains committed to the principles of free and open trade, which have underpinned our economic success.
Free and open trade brings economic opportunities, creates well-paid jobs and fosters innovation. It builds economic resilience within a strong rules-based international trading system.
Our membership of the EU makes us part of a growing network of EU Free Trade Agreements, supporting more opportunity for exports and investment, helping support jobs and growth at home, maintaining strict EU standards on food safety, animal and plant health, and supporting better environmental and human rights standards around the world.
Our trading relationships are truly global, with strong exports to all regions of the world, and total trade goods and services in 2023 over €1 trillion.
This has resulted, in headline terms at least, in public finances that are in a position of relative health – we have also provided for significant reserve funds to ensure that we continue to invest in our country’s future prosperity.
We acknowledge that much of our budget surplus can be attributed to the strength of corporation tax revenues, a significant portion of which has to be considered windfall in nature – this is something that must be carefully managed.
In resisting the pressures to spend too much in recent years, we now have a strong fiscal position to start from.
While we continue to work to address the risks we face, and exert influence where we can, central in our response to tariffs must be a greater focus on increasing our competitiveness, controlling costs where we can, and on delivering critical infrastructure and investment.
The new Programme for Government, which outlines our commitment to delivering for all people and all regions across our shared island over the next five years, is very strong in this regard.
The Government will, in the coming months, bring forward an Action Plan on Competitiveness and Productivity, with a focus on issues such as the cost and regulatory burden on business; research, development and innovation; planning and regulation; and energy costs.
This will be an important plan, setting out how we can continue to our path of economic development, ensure our attractiveness for investment, while supporting our domestic business to grow and develop, becoming more productive and innovative.
I have engaged with some of the most impacted companies at the highest level, helping inform our response.
We are also working closely with businesses and workers, through the Labour Employer Economic Forum and the Government’s Trade Forum, considering how best we can collectively respond to the challenges we face.
This means working constructively, as we have in other recent challenges, to minimise the impact on employers and workers in sectors affected and to ensure our future economic prosperity.
Our track record, in protecting the economy and jobs, whether through on Brexit, COVID or the war on Ukraine, is clear.
The challenge we face now is different – what is needed is a strategic and thought through approach. We will be developing our analysis in coming weeks to better understand the impacts we face – including distinguishing between temporary and structural changes.
We are facing into a period of high uncertainty, which could put considerable pressure on the public finances – we need to proceed carefully and manage the resources we have available.
Already though, we have in place a strong set of employment and business supports available to affected companies.
Our state agencies are stepping up their engagements with industry – supports are available including grants for strategic assistance, market discovery and diversification, digitalisation and innovation.
A global network, including Enterprise Ireland’s 42 overseas offices, is already working with companies to find and develop new markets
And for workers, we have a Short-Time working scheme to help those placed, temporarily, on a shorter working week by their employer, and a new Jobseeker’s Pay-Related Benefit to better protect the incomes of those who might lose their jobs.
Most of all though, we need to avoid being deflected from the core challenges which will sustain long-term prosperity: investment in infrastructure; investment in our people through education, training and skills; investment in innovation; and a more focused approach to regulation and addressing costs in our economy.
We will not be complacent in managing the challenges we face – the Government is committed to protecting our economy and jobs, to developing our enterprise base and to enhancing our attractiveness for investment – and in doing so ensuring our continued prosperity.
And we do this as proud members of the European Union, an integral part of a market of 450 million people, one of the biggest markets in the world. This provides the ultimate protection and from where we, working with our EU partners, can negotiate from a position of strength.
ENDS