The Minister for Finance has said tens of thousands of jobs in Ireland could be at risk if US trade tariffs are introduced in early April.
Paschal Donohoe said that in a worst case scenario, in the medium term “it is very possible that between 50,000 and 80,000 jobs that would have been created or kept within the economy won’t be”.
He also indicated that income tax cuts proposed in the programme for the government may not go ahead if severe tariffs are introduced.
Speaking on RTÉ’s This Week programme, Minister Donohoe said a global trade dispute will impact on people’s living standards, and the Government may have to make decisions to protect the public finances.
The United States is threatening to announce tariffs of up to 25% on products coming from the European Union on 2nd April.
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Asked if the tariffs could trigger a recession in Ireland, Minister Donohoe said that depended on the magnitude of tariffs, how the rest of the world responds, and whether they are temporary or permanent.
He said, in a worst case scenario, in the medium term “it is very possible that between 50,000 and 80,000 jobs that would have been created or kept within the economy won’t be”.
He said we could also see an impact on GDP by 2% to 4%.
Minister Donohoe added that it was important to be honest about the scale of risk that is there at present.
He said for some, their jobs could be at risk, but that the Government would be dealing with that risk from a position of near full employment.
He said that it was difficult to accurately forecast what it might mean for living standards in the future, but in a global trade dispute, it will impact living standards.
Asked if Government support would be provided for companies or sectors which are worst hit by tariffs, he indicated there may be difficulties in providing a significant support package.
“We could find ourselves in a situation where we’re seeing tax revenue not growing the way it has in the past, exactly at a time when an economic issue is developing,” he said.
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“So while we would want to offer support and be of help, what we won’t be able to do is bring in the kind of economy-wide pandemic support that were in place in the past, because we will need to keep safety in our public finances and preserve our economy over the medium term.
“There will be other choices that we will have to make. Those choices could mean current spending, not growing the pace we were anticipating. It could also mean we have to make changes in relation to taxation, because we have to prioritise the keeping of jobs and the retention of the competitiveness of our economy.”
He said that personal tax cuts were outlined in the election – but if there was to be an economic shock “that would not be the right thing to do”.
He said the Government would publish an economic outlook in April, once the scale of the tariffs is known.
Minister Donohoe, who is also President of the Eurogroup of Finance Ministers, said if the US introduced broad tariffs, the EU would “respond back”.
“And if that were to happen, it will mean difficulty, but that difficulty is caused by the application of the US tariffs in the first place,” he said.
Asked if Ireland would be seeking to prevent EU counter tariffs on US bourbon, in order to protect against tit-for-tat tariffs on Irish Whiskey, Mr Donohoe said: “We’ve already made the case for and will make the case formally for the importance of the whiskey sector in the drinks sector here in the Irish economy, and for that being recognised in the EU response back.”
Sinn Féin’s finance spokesman Pearse Doherty has said that the European Union should not “kneejerk” when it comes to considering countermeasures against potential US tariffs.
He told RTÉ’s This Week that a trade war should be avoided as it will impact jobs and the economy, and instead the EU should calculate whether reciprocating tariffs would help resolve those issues.
