Donald Trump’s return to the White House is likely to reignite the uncertainty which was a trademark of his first term but unrestrained by re-election concerns, he will now feel emboldened to implement a raft of protectionist economic policies which could have serious knock-on effects for Ireland.
Among the consistent measures Mr Trump has touted as part of his economic plans are tax cuts for corporations and import tariffs, both of which will be damaging to the Irish economy depending on the severity.
Mr Trump has plans to lower the US corporate tax rate to 15% which would bring it down into direct competition with Ireland’s 15% for corporations making €750m or more a year and the lower 12.5% for companies making less.
In light of this, US based multinationals may shift investment as well as some of their operations back to the US at the expense of Ireland.
The Department of Finance has for years raised concerns about the Government’s reliance on corporation tax receipts, which have ballooned significantly in recent years, and in particular the concentration of those receipts in just a few handful of companies.
On Tuesday, the Government published figures that showed it took €76.3bn in tax during the first 10 months of the year, up almost 15% on the period in 2023, with corporation tax making up almost 36% of that.
Decisions made by Apple, Google, Microsoft, Amazon, and Pfizer, just to name a few, could have wide-reaching implications for the economy and the country as a whole.
One thing that may insulate the Irish economy somewhat is that all these companies have spent decades investing in Ireland — building their workforces as well as their infrastructure — not to mention that Ireland serves as their entry point to the EU.
So the fallout in this area of the economy will very much depend on how these companies react to such a tax cut in the US and whether they feel the need to kowtow to Mr Trump to ensure they are on his good side.
On Mr Trump’s other economic proposal, Ireland and the EU may not be so lucky.
Mr Trump has made imposing tariffs a cornerstone of his economic policies. During his first term he implemented tariffs, particularly on China, but this time he has spoken about implementing an across-the-board tariff on all imports into the US.
He suggested during the campaign he would impose a tariff of between 10% and 20% on all imports into the US, which would be particularly bad news for Irish exporters as it would increase the prices consumers would pay for their goods.
The US is an incredibly important market for Irish exports. According to the Central Statistics Office, between January and August this year, Ireland has exported €45.6bn worth of goods to the US, an increase of €8.8bn compared to the same period last year.
A 10% to 20% tariff on goods would make Irish products uncompetitive in the US, reducing a vital source of revenue for companies here.
However, the additional problem for Ireland when it comes to exports is that US pharmaceutical companies produce a lot of products here for exporting. To avoid these tariffs, they may be inclined to move manufacturing back to the US for US specific products.
Mr Trump will also face retaliatory tariffs from other countries as well as the EU, which could lead to a trade war on multiple fronts, driving up prices for everyone.
During Mr Trump’s first term, he placed a tariff on all steel and aluminium imports into the US, which the EU responded to by slapping penalties on US products like bourbon, motorcycles and orange juice.
The difference this time is that Mr Trump is not specifying a sector and instead plans to implement an across-the-board tariff on all imports into the US.
While the Irish economy was not hit too hard by Mr Trump during his first term — the covid pandemic saw to that — it might not be so lucky to escape it this time unscathed.
This time around, the adults which had contained Mr Trump’s worst instincts have left the room and he is now less constrained than he has ever been before. He will also have compliance from the Republican majorities in both the US House of Representatives and US Senate.
So Ireland will just have to hold its breath and see what an unencumbered Donald Trump will do.