Minister for Finance Paschal Donohoe has warned of the impact of an EU-US trade war, adding that going down such a path with cause issues for job retention.
It comes after US President Donald Trump tasked his economics team with devising plans for reciprocal tariffs on every country that taxes US imports, raising the risk of a global trade war.
Speaking this afternoon, Mr Donohoe said: “We need to be able to demonstrate to President Trump’s administration that trade is beneficial and that it could be even more beneficial in future.”
“If we do go down the route of the application of tariffs Europe will need to respond back.”
“But such a path is something that will cause issues for the standard of living and the retention of jobs, and that journey is something that will affect economic growth for the world, and of course America and the European Union.”
Mr Donohoe said the EU will seek a negotiated outcome to avoid the application of tariffs which would be damaging for trade on both sides of the Atlantic.
It follows comments from Ireland’s EU Commissioner Michael McGrath this morning, who said that while the preference of the EU is to resolve issues relating to US tariffs by way of diplomacy, Europe stands ready to respond “in a swift and firm manner” should that fail.
Commissioner McGrath said the EU believes the international rules-based system has served global trade very well and the imposition of tariffs represents the wrong direction.
He said the European Union had been preparing for some time for all eventualities and was now ready to respond.
“We are happy to engage with the Trump administration in a discussion we believe can be mutually beneficial, but we do stand ready to respond in a firm and swift manner in the event of any tariffs being imposed that we believe are unjustified,” Mr McGrath said.
He said tariffs would make everyone poorer on both sides of the Atlantic.
“If we get into tit-for-tat tariffs, there are no winners,” Mr McGrath said.
He was speaking in Cork following a meeting with the Institute of Bankers in Ireland.
‘No winners’ in a trade war
Sinn Féin Spokesperson on Finance Pearse Doherty said that MrTrump’s threats to impose reciprocal tariffs should be taken “very seriously.”
Speaking on RTÉ’s Today with Claire Byrne, Mr Doherty said that there are “no winners” in a trade war.
“Any major trading partner in America is a huge trading partner of Ireland,” he said.
“We obviously have many jobs that are dependent on American investment, and it’s not a one-way street, we also create a huge amount of jobs in America and are one of the largest investors in America.”
“When a trading partner makes comments like these, regardless of whether you believe that there will be follow-through in full or not, you have to take it very seriously.”
Mr Doherty said that the issues of trade and tariffs fall under European competence, adding that European leaders have a contingency plan in relation to reciprocal tariffs.
“The way to win a trade war is not to be in one, so there’s no winners in relation to this, and the losers are consumers who will see higher prices in relation to all of this.”
The EU has vowed to respond “firmly and immediately” to trade barriers.
“The European Commission views President Trump’s proposed ‘reciprocal’ trade policy as a step in the wrong direction,” the bloc’s executive body said in a statement.
“The EU will react firmly and immediately against unjustified barriers to free and fair trade,” the commission, which runs trade policy for the bloc’s 27 nations, said in a statement.
European Commission President Ursula von der Leyen has said that the EU is ready to finding mutually beneficial solutions with the US on tariffs.
“The EU maintains some of the lowest tariffs in the world and sees no justification for increased US tariffs on its exports,” the European Commission said, vowing to protect European firms and consumers.
“Tariffs are taxes. By imposing tariffs, the US is taxing its own citizens, raising costs for business, stifling growth and fuelling inflation.”
Irish businesses
CEO of the Irish Exporters Association Simon McKeever said that he was deeply concerned about the comments made by President Trump on tariffs and the implications for the EU and Ireland.
He said that he was also concerned about any retaliation the EU might take.
Mr McKeever said international trade is very complex, adding that any one country taking a trade action against another has implications for the whole supply chain.
Speaking on RTÉ’s News at One he said that Irish businesses needed to take the threat seriously. He said that since before Christmas, the association has asked businesses to do a risk analysis, and this is ongoing.
Mr McKeever added that these changes were not as simple as President Trump is making them out to be, as it takes a lot to unbundle global supply chains, and there is no easy short-term fix.
“Ireland needs to make sure it is talking to all of the stakeholders” involved in this in the US and EU at every level, he said.
He said that domestically, his association is looking forward to meeting with the Tánaiste’s group and working together towards providing reassurance around this.
He said that he expected that there would be a combined stance and response within the EU on the issue, as seen during Brexit, but that this does not mean the US will not try to talk to different countries, as has already been seen this week.
“The rule book has completely been torn up,” he said.
