One year ago -on April 2nd, 2025, US President Donald Trump had his famous Liberation Day tariff announcement.
It threatened a damaging jolt to Ireland’s economy. Twelve months on, two things are clear.
First, tariffs have hit some exports, but overall the impact on Ireland has been limited – and less than many other countries.
Second, the trade threats have not gone away and a new investigation by the White House specifically identifies Ireland’s trade surplus with the US as a problem. Uncertainty in trade with the US remains the new normal.
Liberation Day
“It’s our declaration of economic independence”. So said Donald Trump as he stood making his Liberation Day announcement in the White House Rose Garden, in front of a makeshift board with tariff levels for different countries written on it.
Iran’s cyber-attacks on Irish-based companies and the ongoing impact of conflict in the Middle EastTariffs of 20 per cent were to be imposed on imports from the European Union (EU) – a 10 per cent baseline tariff and a 10 per cent ” reciprocal ” one, justified by EU barriers to US imports.
Ireland’s vital exports of pharma were excluded, but the message was that they would be dealt with as part of an investigation under separate legislation.
Other special tariffs on steel and aluminium and the car sector were also in place. Serious damage to the Irish economy seemed possible.
Partial retreat
A major adverse reaction on financial markets forced Trump to change his plans – and appears to have influenced his behaviour ever since.
By mid-April he had delayed the reciprocal tariffs – proceeding with the 10 per cent baseline – and a tariff war with China was under way, which later eased. More threats followed, but it was becoming clear that Trump’s tariff bark was generally worse than his bite.
Deals were being struck, including an outline agreement with the EU with a maximum 15 per cent tariff. And then, in late February, the US Supreme Court struck down tariffs imposed by Trump under the 1977 International Economic Emergency Powers Act – the reciprocal tariffs.
He then had to to scramble by imposing 10 per cent tariffs under separate legislation – which can stay in place initially for six months – then increased it to 15 per cent and then brought it back to 10 per cent.
Historical tariffs in place under World Trade Organisation (WTO) rules were added to this, meaning the actual rate for companies subject to these earlier tariffs, such as many food firms, was a bit higher.
Port of Los Angeles. The average tariff on goods entering the US by early this year was just under 14 per cent Photograph: Adam Amengual/The New York Times
After all the ups and downs, the average tariff on goods entering the US by early this year was just under 14 per cent, according to the Yale Budget Lab, up from 2.5 per cent before he took office. A substantial change on any criteria, even if a lot less than threatened on Liberation Day.
Irish impact
Ireland has not escaped completely. Not by a long shot. Tariffs have risen in a number of areas over the past year and food and plastics have been affected by the more recent changes.
But Ireland has not been hit as hard as the deal done with the EU, while still to be implemented, has stayed Trump’s hand as he wants the deal to be completed. Ireland is not a major exporter in the sectors worst hit – car and car part manufacture and steel and aluminium. And pharma had been largely excluded all along, including from the new tariffs.
[ Irish exports to US fall 72% as trade turmoil linked to tariffs continuesOpens in new window ]
Instead, Trump has negotiated deals behind the scenes with major manufactures involving lower prices in the US and more investment at home. In return firms have reportedly received a three year guarantee of no tariffs.
Overall, Ibec, the business lobby group, points out that Ireland has benefited significantly from the ” carveouts” for pharma and semiconductors.
It calculates that some 75 per cent of Irish exports by value are not covered by tariffs (pharma is the main item here) while it puts the average effective tariff rate on all Irish imports into the US at 1.8 per cent.
Estimates of this figure vary, but it is clear that while Ireland is responsible for a large part of the EU trade surplus with the US, it has escaped the worst of the tariffs and the rate for Irish exports is well below the EU average.
An EU calculation on a slightly different basis late last year, before the US Supreme Court decision, put the Irish rate at 3 per cent with the EU average of close to 10 per cent.
Future risks
So is it all settled? Not by a long shot. Carol Lynch, partner and trade expert at BDO, says Irish firms still face significant and problematic uncertainty.
For many things are not settled – it would be easier in many cases, she said, to know a fixed tariff of say, 15 per cent, was there and to deal with it. And even with the tariffs in place now, Lynch points to areas of complexity and uncertainty, such as the tariffs that apply to products that use heavily-tariffed steel or aluminium as an input.
And there are still key broader questions.
The European Parliament voted this week for the US trade deal to go ahead. Photograph: Thierry Monasse/Getty Images
Will the EU/US trade deal be finalised?
The European Parliament voted this week for the deal to go ahead, but put a range of conditions on it, including that Trump does not impose new tariffs above 15 per cent and that there is a “sunset clause” at end March 2028, meaning the parliament must then approve the deal again.
All 27 member states must all sign up to a final text, as must the US. Amid transatlantic tensions over the Gulf, it is not clear how this will develop. And if the deal collapses, who knows how Trump might react?
What happens after July when the new tariffs imposed after the Supreme Court decision run out?
They can be rolled over – it would probably require Congressional approval. By then the EU/US deal may also be settled, one way or the other. But nobody knows.
More uncertainty here for Irish businesses particularly those in sectors like food and drink, currently paying 10 per cent plus historic charges often in the 5 per cent range.
What about the new investigation?
Trump has ordered a new investigation into the trade practices of 16 trade partners, including the EU. This is a vehicle to get legislative cover for reimposing tariffs under yet another piece of legislation, section 301 of the 1974 Trade Act.
Under EU section, the countries with the biggest trade surpluses with the US – Germany and Ireland – are picked out for special mention. This may come to nothing if the EU/US deal is ratified. Or if it is not could be used by Trump as a stick to beat the EU.
Trump seems to have concentrated on the specific confidential deals with major players, including those with Irish operations like Eli Lilly. Photograph: Jakub Porzycki Getty Images
What about the pharma sector – and semiconductors?
The results of a special investigation into the two sectors undertaken last year were never published. The EU/US deal involves a 15 per cent cap on all future tariffs.
And in pharma, Trump seems to have concentrated on the specific confidential deals with major players, including those with Irish operations like Eli Lilly – a huge contributor to exports and Irish tax revenue – and Pfizer.
This may see off the threat of major tariffs on these companies though the longer-term impact on Ireland of their major new investments in the US are hard to assess.
Might they involve, for example, a move in the manufacturing location of high value active ingredients from Ireland to the US in future years, or a shift in intellectual property assets back to the US.
Either could hit Irish tax revenues. And the risk of tariffs remain for other pharma companies who have not made ” deals” involving new investment commitments in the US.
[ US launches new probes into EU and other trade partnersOpens in new window ]
The bottom line
As long as Trump is in power, uncertainty will continue. If the EU/US deal can be finally signed and implemented this will take some of the risk off the table for Ireland.
If not, all bets are off, even if Trump will probably try to avoid big new tariffs in the run up to the November midterm elections. Ireland’s massive tech service exports are currently excluded from tariffs, but there are tensions here, too, over regulation.
According to Lynch of BDO, there is no going back to the old world of trade certainty: “The global trade system will not revert to the familiar, and the open markets and low tariff era is no longer in place.”
As a country with a big trade surplus with the US, Ireland will remain in the spotlight and at some risk.