As Trump’s tariff front moves in, Ireland braces for impact

Met Éireann doesn’t issue alerts for US trade policy – but if it did, US President Donald Trump’s move to impose 20% tariffs on EU goods would have been an orange warning, at least. With the prospect of more to come, the pressure is building for Ireland.

While tariffs dominated headlines, March tax returns brought good news for the Exchequer. Income tax, VAT and corporate receipts rose strongly in the first quarter, fuelled by full employment and consumer spending.

But there’s little illusion in Government Buildings. These numbers reflect past performance. The reality now is more precarious: a dual economy where tax revenue keeps flowing in, even as the conditions that sustain it begin to crack. If the tariff regime widens, particularly to include pharmaceuticals, the hit to exports, profits, and, ultimately, tax receipts could be fast and significant.

This isn’t just about corporation tax. Tariffs hit margins, then jobs. Disposable income and spending would follow, dragging down income tax and VAT. For Ireland, this could be more than a passing squall.

Food first, pharma next

In the first wave, the food and drink sector was clearly exposed. Irish whiskey, beef and dairy are premium Irish products in a competitive US market. Tariffs don’t just push up prices; they can also erode hard-won positioning.

One of the biggest headlines from ‘Liberation Day’ wasn’t in the speech but in the fine print. Pharmaceuticals have been given a reprieve for now. The sector won’t be relaxing. This likely represents a pause, not a pass. 

Executives are preparing for escalation. If the US broadens the list, the impact on profits and investment could be immediate. Expansion plans may be delayed, and hiring could slow. This isn’t limited to boardrooms. Pharma employs tens of thousands in Ireland, from east coast biotech hubs to Cork and Limerick manufacturing sites. A slowdown ripples out through supply chains, construction, services, and ultimately into the national accounts.

The same holds for tech, another US-centric industry with deep roots in Ireland. Many of these companies benefit from market access, talent, and low corporate tax — but the bigger players also depend on trade certainty. That hostility might not just come from Washington. EU countermeasures could focus on services, adding another layer of complexity.

The Irish government is in a bind. It must protect Irish industry, but any response must run through Brussels. Retaliatory tariffs are possible, but Ireland will want to avoid escalation. Retaliatory tariffs risk boomeranging back onto sectors like tech — particularly multinationals headquartered here. But doing nothing carries its own cost.

Impact on Northern Irish businesses

With the UK on the receiving end of a lower 10% tariff, Northern Ireland’s post-Brexit trading status might look like a hidden advantage given its close ties with both the British and European markets. This, at a glance, could make the north look more attractive to business. 

Moving manufacturing isn’t as simple as flipping a switch. There are sunk costs, different tax regimes, and complex rules of origin. Ingredients or components sourced from the EU could still attract tariffs, depending on how origin is assessed. And Ireland’s 12.5% corporate tax rate remains a powerful draw compared to the UK.

Some activity may shift north but don’t expect a major rerouting. With trade policy changing fast, few will bet heavily on stability.

Understanding the origin of their goods is vital for businesses, as this will determine which tariffs may apply on goods imported into the US, while Northern Irish firms must also ensure they are fully cognisant of Windsor Framework implications in relation to any reciprocal EU tariffs on US imports.

Keeping an eye on the bigger picture 

The advice is the same on both sides of the border: stay agile and manage risk carefully in a shifting trade environment. Ireland is no stranger to external shocks, but this one feels sharper. Tariffs are coming fast and with less predictability than before. 

This is one more pressure point for businesses already stretched by inflation, global uncertainty and tight labour markets.

There’s no single answer. Some firms will seek to scale through M&A, Others may rework supply chains or seek new markets, and strategic partnerships might gain ground. Pricing, margins and exposure are back under the microscope until this storm passes — and that may take some time.

For further insights on Trump’s sweeping new tariff plan and its global economic impact, read Trump rolls out expansive global tariff agenda.

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