US tariffs and EU response
Deputies raised Donald Trump’s global tariff announcement and its risks for Ireland and Europe. The Tánaiste agreed tariffs are harmful, said the EU must respond carefully, and stressed the need for negotiations and unity while warning more sector-specific shocks may follow.
Chuala muid ó Donald Trump aréir go mbeidh sé ag cur taraifí i bhfeidhm ar fud an domhain. Is polasaí gan tuiscint é sin a ndéanfaidh earraí níos costasaí do mhuintir na Stát Aontaithe agus a mbeidh impleachtaí aige sa Stát seo agus ar fud na hEorpa fosta. Last night, we were subjected to US trade aggression. To add insult to injury, we had to watch the US play the victim. Trump talked about prying open markets and breaking down barriers. He wants unfettered access to every market, and the EU is front and centre in that agenda. What Trump calls reciprocal tariffs are no such thing. I watched him as he waved the US trade estimates report, a US document that clearly sets out that the average EU tariff is 5% on US goods. Fact and reality took a back seat last night when he went on to claim that the EU has tariffs of 39% on US products. What Trump did was an act of self-sabotage that will heap higher costs on US consumers. That is what tariffs do, especially blanket tariffs. We need to be careful not to step into the same space, risking jobs and higher prices for workers and families. We need to protect people struggling with a cost-of-living crisis from higher prices. Working people cannot be expected to pick up the tab from this mess that Trump has created.
This morning, I raised with the Minister for Finance the need for a very early assessment of the impact of these tariffs on particular sectors. That is what we need in order to make sure that the supports at State and EU level are in place. We need to see urgency in contingency planning, making sure supports for industries and workers are ready to go, if and when they are needed. We also need to actively look at how we de-risk the economy and mitigate the impact of these tariffs. The fact that pharma has not been hit with these tariffs buys us some time, but the reality is that we do not know how much time we have.
There are serious issues with regard to the all-Ireland economy now we have two different tariff rates on this small island of ours and, potentially, two different responses to those rates. I have been in contact with my party colleague the Minister for the Economy in Northern Ireland. I ask that those in government work hand in glove and in lockstep with their counterparts in the Assembly. The first step in this regard would be to convene the North-South Ministerial Council without delay. I ask that this be done.
Yesterday, Deputy McDonald asked the Taoiseach to convene a meeting of the party leaders. I repeat that request and ask that such a meeting should take place without delay. We need to have a laser focus on things we can control. There are certain things we cannot control. We need to make sure our voice is heard in Europe. We also need to protect the all-Ireland economy and ramp up badly needed investment. We have been saying for years that we have allowed our competitiveness to slip. Businesses big and small have been telling us about the issues that are affecting us. We need investment in housing, infrastructure, energy, transport and childcare.
This is a time for cool heads. We need to take a breath and look at the reality of all options that are on the table. We also need clarity on the direction of travel of the Government. What position is the Government going to take at European Council meetings? Does it support counter-tariffs? The ESRI and the Department of Finance have told us that counter-tariffs will have a negative impact on jobs and will result in job losses and higher prices for Irish consumers. What is the Government's position on non-tariff measures? There has been speculation that tech could be in firing line. This would have a significant impact on Irish jobs. What contingency plans are in place? Is the Government looking at supports for particular sectors that will be impacted as a result of what has happened? Will it convene meetings of the various party leaders and of North-South Ministerial Council as soon as possible?
Comment on this
I begin by paying tribute to Mick O'Dwyer. It is with tremendous sadness that we learnt of the passing of one of Ireland's greatest GAA icons. His contribution to Irish sport and community life was extraordinary, particularly in his native county of Kerry, although we do like to claim a bit of him with the great joy he brought us in Wicklow and many other counties. I think of him and his family on his passing, and all of the GAA family as well. May he rest in peace.
I thank Deputy Doherty for the range of questions he posed. I agree with him that tariffs are bad. They are bad for Ireland, bad for Europe, bad for the US economy, bad for consumers, bad for growth and bad for jobs. The actions of the US President last night are deeply regrettable. It seemed clear, particularly in recent days, that President Trump was determined to have this moment - what I describe as a moment of chaos - in terms of the announcement of tariffs. This the biggest change in terms of trading approaches in probably a century. He has had that moment, and what now needs to happen is negotiation. If I am to try to find some glimmer of hope in a very dark and grim situation, it is that there were references to negotiation by the US President, the US Secretary of Commerce, with whom I spoke last week, and the US Secretary of the Treasury and in the executive orders signed by the US President. That is what needs to happen. There needs to be calm, measured and strategic consideration. This is the approach Ireland will take.
The Deputy asked a very direct question about counter-tariffs. I think he will agree that this was not the EU's idea. It was not Ireland's idea. We do not want to get into an escalatory tariff situation. I share that view. However, we have already had three hits by the US in this regard. We had an impact to the tune of €25 billion to €26 billion as a result of US measures relating to steel and aluminium. There has also been an impact amounting to around €75 billion in terms of the decisions the US made regarding cars. The latter will have an effect on the prices that people across Europe will pay for cars. We do not yet have the quantity involved, but the impact of the announcements last night will probably amount to hundreds of billions. At some point, the EU, which has shown significant restraint, is going to have to say "Well, hang on a second, if you're not willing to negotiate and get round the table, there is going to have to be a response". The comments by the President of the European Commission, Ursula von der Leyen, earlier were balanced and restrained. The message is very clear - we want to talk, negotiate and find a way forward. The question is whether the US is willing to do that. The coming days will show that. The meeting of trade ministers in Luxembourg, which I will attend on Monday, will be an opportunity for the 27 member states of the EU to come together.
We will be carrying out early assessments of impact. Some of this has already happened. I have convened a meeting of the Government's trade forum for tomorrow. This involves business representative bodies and it will provide an opportunity to take stock.
On competitiveness and controlling what we can control, I have asked the Minister, Deputy Peter Burke, to bring forward proposals to the Cabinet committee on the economy, which I chair, next Thursday in terms of what we can accelerate in the programme for Government around our economy, competitiveness and productivity.
In the context of party leaders and briefings, I have provided briefings. Deputy Doherty attended such a briefing on behalf of his party last week. I would be very happy to do that again tomorrow. In the context of whether there is a need for other forums or structures, we have to have a free flow of information. I am very clear on that. I want to do that and am very happy to make all information available so we can have informed debate, discussion and decisions.
Regarding the all-island economy, I came off a call ten minutes ago with the Deputy's colleague the Minister for the Economy in Northern Ireland, Caoimhe Archibald. I acknowledge the good job she is doing in trying to work her way through this. We met yesterday with the deputy First Minister and Minister Archibald via video conference. We agreed to keep in very close contact because a differential is likely to exist from 9 April next.
The Deputy asked about non-tariff measures, which I think is the anti-coercion instrument. My view is that this would be the nuclear option and that we should seek to de-escalate rather than arrive at that destination.
Comment on this
I understand that the North-South Ministerial Council is awaiting confirmation from the Government. This is important because there will be cross-cutting in terms of agriculture, finance, the economy and jobs. We need the type of all-Ireland approach that we saw during the Brexit negotiations in a very clear and effective way.
I agree with the Tánaiste's points about Trump and about the fact that Europe did not bring this upon itself. I am glad Europe has not gone with immediate counter-tariffs, but we need to be very careful in the context of the impact of any countermeasures. We know that countermeasures will increase prices for Irish consumers.
That is something that should not be tolerated in these circumstances. It will risk jobs and the public finances. The real question is: will countermeasures bring Trump to the negotiation table? We need cool heads, negotiation and calm. During the first Trump Presidency, there were countermeasures and it did not result in his tariffs being reduced.
Is there discussion on non-tariff measures at an EU level? Is that in the sight lines of Europe? There is a big impact and a big risk for Ireland if it focuses on tariffs.
Comment on this
I think I saw a comment from a spokesperson for the French Government today making some reference to that. I do not dismiss that but in the nearly daily conversations I have had with the trade Commissioner and those I have had with nearly a dozen European counterparts, the overwhelming majority view is to try to find a way to bring people around the table. The Deputy's question is valid. What gets the US Administration around the table? That is a judgment call that we have to work through together in the days and weeks ahead. I would make the point that the EU cannot not respond. There is only so much one can sit back and watch happen in terms of the impact on the European economy but any measures we take must be about trying to get to that negotiating table. I genuinely share that view.
The point on the North-South Ministerial Council sounds sensible to me but I have not had an opportunity to discuss it with anybody in government. Certainly, regular structured dialogue, North-South, east and west will be essential.
The Deputy referred to pharma earlier. We should not lull ourselves into a false sense of security here. This is just the start. President Trump has been clear he wants sector-specific actions on pharma. That is why it is really important that we work at an EU level. Yes, we have a large pharma industry here but we are not alone. There is about a dozen EU countries with a pharma industry. We have made that point to the Commission. The fact that next Tuesday, President von der Leyen will convene a strategic dialogue with the pharma industry is an important step but we should not fool ourselves that there are not further plans in relation to sector-specific measures, including pharma.
Comment on this
Last night Donald Trump took aim at every traditional ally of the United States with a blunt and destructive economic weapon. The tariffs his administration has imposed worldwide risk plunging us all into a global recession. In his Rose Garden address, Donald Trump exhibited zero economic rationale for pursuing such an approach but perhaps proved why he is one of very few people in the history of the planet that ended up bankrupting a casino.
The President accused states, both friends and foe, essentially of fiscal grand larceny with no basis for these claims. The great deceiver that he is stated his tariffs were reciprocal, claiming the EU charging VAT justifies his tariffs. He even claims that these are discounted tariffs based on a made up 39% rate he claims the EU applies to the United States. Again, there is no basis to these claims.
There is a new reality coming to bear in the world and the United States, unfortunately, can no longer be trusted as an economic ally. In responding to this change in our relationship, the European Union needs to be measured but resolute. We need to be strategic in how we respond to these announcements with negotiations first but at the same time we cannot allow Trump to run roughshod over global markets without standing up to him. We need to react with urgency and not panic.
There is no doubt that Donald Trump is displaying traits of a wannabe strongman who sees an opportunity to damage democracies around the world. With only 25% of global citizens now living under liberal democracies compared with 50% in 2004, it is more important than ever that we take a stand against any attempt to weaken other democracies. We must resist the rise of the autocrat. We now need to play our role as a member of the EU to bring the US to the negotiating table but to do that we will have to stand firm with our allies and our allies will have to stand firm with us.
In this House, our focus must be on helping workers in Irish firms preparing for the threat of job displacement in vulnerable sectors. We in Labour, with a policy led by my colleague, Deputy Nash, want to see a new short-term wage subsidy scheme such as the German kurzarbeit model which would keep workers in their jobs in order to retain skills and employment in exposed parts of the economy during what will be a tumultuous period. We have been calling for this since the pandemic and the money to fund this scheme can be found in the Social Insurance Fund and the National Training Fund both of which are in substantial surplus. We also need to diversify our economy and we need to continue to invest in our infrastructure. We need to learn from the lessons of the past because if we are not careful, we will lose the ability to grow our economy through haemorrhaging our skilled people and economic attractiveness through underinvestment in public transport and housing infrastructure.
The Tánaiste has already hosted briefings and has said he will host more. I welcome that and I hope that they will continue. Will he confirm if the Government is considering a short-term wage subsidy scheme model or any other Ireland-specific model which will help keep workers in their jobs?
Comment on this
I share the Deputy’s view of some of what we heard in the press conference in the Rose Garden, and that is what it was. One must then work through the legal detail. We are already seeing that things, which were announced as coming in at midnight last night, are not coming in until 5 or 9 April, so there is a fair bit of teasing through beyond the headline announcements. Certainly, the European Union does not impose tariffs of anything like 39% on the United States. The European Union, of which we are proudly a member - the Deputy did not do so but we should not refer to it as having distinct parts - has been very clear that we want talks not tariffs. That is the approach we have been taking almost daily.
There was a view that President Trump was determined to have that Rose Garden moment before getting to the talks. We think that is regrettable. He has had that moment and now can we get on with the talking? That is the approach we should take. I agree with the Deputy and think he put it well when he said measured but resolute. There is a moment where we have to show President Trump that we are a very big economic block. There are 450 million of us and the economic relationship between the EU and the US is worth €1.6 trillion a year. It does not matter what anybody’s politics is; that is not a relationship that can be sniffed at. It matters. It matters to people who voted for him in terms of their jobs, well-being and the prices of their consumer goods. The moment has happened. He has had the big bang moment with the little charts and he has gone through all the tariffs. Now it is about calm, mature, and measured engagement.
I agree with the Deputy about the European unity piece. I am struck by the strength of European unity. I think it is for a couple of reasons. For one thing, we value our European membership, the European Union matters to all of us, but it is also because President Trump has decided to target so many different areas. Slovakia and Germany have big car industries. That has been one impact. Steel and aluminium have had a disproportionate impact on others. Of course there were the EU-wide measures yesterday and potential further measures on pharma. What is very clear is that different countries may feel a moment of pressure at different times but all of us across the European Union are badly impacted as is the US by a high tariff protectionist attitude to trade.
I agree that protecting jobs has to be our number one job collectively. Of course, it does. The Government will keep an open mind and will engage constructively on supports that may be required in the time ahead. I have heard colleagues make that point, including the Minister for enterprise today. Our State agencies, Enterprise Ireland and IDA Ireland, are at the trade forum and will be there again tomorrow as are business representative groups. We will always engage. We have a proud track record across successive governments of supporting Irish business but the first thing we must do is to try to mitigate and not accept this as the final outcome but take up the opportunity to negotiate, to try to negotiate down and to try to get to a better place. That has to be the first priority because that mitigation will do more to protect jobs, growth, investment and our economy than any single support scheme we may be able to put in place.
Those briefings will continue on an as required and regular basis.
Comment on this
It might be somewhat optimistic to think last night was a moment and now we can move on to negotiations. My fear is we will have more moments like this from the President of the United States. EU unity is easier on trade because it is the raison d’être of the EU. It is essentially a trade agreement between European states from which peace and prosperity will flow. Therefore, unity is strong and we should ensure that continues, without doubt. However, we can do things in Ireland, such as a short-term work wage subsidy scheme, the work for which has to be done now. The potential impact of these tariffs will emerge in the weeks, months and years ahead but we have to do the work now. Will the Tánaiste confirm if the Government is considering a short-term work wage subsidy scheme? Both ICTU and IBEC have previously called for such a support. Will supports such as those put in place during Brexit, such as a credit guarantee scheme or a new marketing fund, be considered? Will the Tánaiste confirm if there will be a comprehensive assessment of the companies impacted and, as best we can, the potential number of jobs that could be impacted?
Comment on this
I am very clear that there will be many moments - I think the Deputy is right about that – and there will be sector-specific moments to come. The point I was making was that in my engagement with the US Secretary of Commerce and others it was very clear that the US was not mandated to engage or negotiate until after this liberation day as they bizarrely described it. That has happened and now we need to get on with the engagement and negotiation. The European Commission and the European Union needs to make judgment calls as to what is required to get into that meaningful process of engagement.
On looking at sectors and impacts, that work is already under way. On the impact on jobs, we have done some modelling. The ESRI has done some modelling, which has been produced. The main impact from a sustained period of tariffs in the first instance seems to be a slowdown in new job growth and employment growth. That is not good either, of course, but working to retain the jobs we have will be the absolute priority. I do not want to give a knee-jerk response to any specific scheme. We have a meeting of the Labour Employer Economic Forum, LEEF, tomorrow. We will have a meeting of the Government trade forum. We are happy to engage and share insights and work with the Deputy on supports that may be required for the time ahead. The priority today and for the coming days is to mitigate the impact of the tariffs and get it to a better place.