Ireland’s finances are in “good condition”, according to the Minister for Finance, who said he is confident the country can rise to the challenge of US tariffs.
Paschal Donohoe cautioned however that the scenario Ireland now faces could “regrettably” have a “significant effect” on growth and job creation, but negotiations are under way at a European level to try and avoid this.
US President Donald Trump has threatened to impose a 30% tariff on imports from the European Union starting on 1 August.
He has said that a trade agreement could possibly be reached between the European Union and the United States.
“(The) European Union has been brutal, and now they’re being very nice. They want to make a deal, and it’ll be a lot different than the deal that we’ve had for years,” Mr Trump said.
The European Union’s trade chief, Maroš Šefčovič, is headed to Washington for tariff discussions.
Speaking on RTÉ’s Morning Ireland, Mr Donohoe said Ireland is facing challenges, but said he is “confident that with the decisions we’ve made, the hard work of the people of Ireland and further choices we can make, we will rise to this moment and get our way through it.”
The minister said that while there are projections for 10% tariffs, projections for 30% tariffs are also being worked on, adding that it is “not as straightforward as saying there would be a simple extrapolation forward” of the figures already quoted.
Watch: Minister for Finance says large employers are ‘pausing’ decisions due to economic uncertainty
However, he said it is important to be honest that the impact on job creation and levels of employment within the economy would be worse.
“This is a big challenge, we need to have a moment of recognition of that, but we have faced challenges before and we will get through this one too,” he said.
Minister Donohoe said the level of current spending growth within the economy will have to be reduced, explaining that current spending at 8% to 9% was happening when inflation was between 5% and 10%
He said that while the cost of living is “still so hard for so many” at the moment, the rate of increase of prices is “around 2%, not 5 or 10%”.
Mr Donohoe said IDA Ireland had a “really strong” first half of this year and the amount of investment and jobs within the economy continues to be “very positive”.
However, he said that in the engagement he has with large employers and investors in Ireland, he has seen them “pausing” decisions.
“That’s not the same thing as saying decisions won’t be made or they can’t go in our favour in the time ahead,” he added.
“But understandably, with the level of economic uncertainty that is there, employers are taking care regarding decisions they make, which is why an atmosphere of certainty here in Ireland, economic policy and investing is the best way to try to mitigate the uncertainty that others feel.”
The minister said the forecast excluding the impact of 30% tariffs still shows a high level of employment growth within the economy. He said it also shows the number of jobs being created growing, although at a smaller pace.
“But we have a challenge, because of trade uncertainty, which is why negotiation, which Simon Harris and Micheál Martin are doing, and investment and competitiveness, is the best response back,” he added.
To press for what Mr Trump views as better terms with trading partners and ways to shrink a huge US trade deficit, his administration has been negotiating trade deals ahead of an 1 August deadline, when duties on most US imports are due to rise again.
Asked about the prospects of a deal with Canada, which like the EU, is readying countermeasures if talks with the US fail to produce a deal, Mr Trump said: “Too soon to say.”
His comment was in line with the assessment of Canadian Prime Minister Mark Carney, who said earlier that a deal that works for Canadian workers was not yet on the table.
Mr Trump also said he would probably put a blanket 10% or 15% tariff on smaller countries.
