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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

Trade tariffs and cost of living

Summary

Deputy Doherty warns tariffs and the carbon tax will worsen the cost-of-living squeeze for workers and families. The Tánaiste says he is engaging with Northern Ireland and will assess any UK-US deal and possible EU countermeasures once details are clear.

Tá a fhios againn go bhfuil oibrithe agus teaghlaigh ag streachailt cheana féin le costais maireachtála. Déanann an chaint seo ar tharaifí dochar do ghnáth-theaghlaigh trí phraghsanna a ardú. Ní féidir leis an Rialtas seo oibrithe a thréigean. Tá na hoibrithe seo faoi bhrú cheana féin. Tá imní orthu agus iad ag cloisteáil faoi chogadh trádála sna nuachtáin.

Later today, we expect the President of the United States to announce a trade deal with Britain. This will be the first deal struck since the American Administration unveiled aggressive tariffs on its trading partners across the world, including here in the European Union. Those tariffs were latterly partially suspended to allow space for negotiations. We all know that it is through negotiations and cool heads that this issue will be resolved. This major change in US economic policy, particularly in the context of a trade deal with Britain, brings unique challenges here on the island of Ireland for cross-Border trade and our all-island economy. The Government needs to be alert and to act to ensure that post-Brexit gains and the progress made are protected so that the all-island economy can continue to grow and prosper.

The European Union is also set to launch its suite of countermeasures to the US tariffs today. We have warned that a tit-for-tat trade war between the United States and the European Union would not be in Ireland's interest. The ESRI and the Department of Finance have been clear that President Trump's tariffs are damaging and that countertariffs from the EU would make things worse through a hit to the public finances and to jobs and through pushing prices higher for Irish consumers. I hope the Tánaiste has made Ireland's unique position very clear in his discussions with his EU counterparts. We need an outcome that protects Irish jobs, livelihoods and the future of our economy and the all-island economy. As I said, that requires cool heads and calm negotiations. It also requires a willingness on both sides to have meaningful negotiations.

We know that nobody wins in a trade war but it is always ordinary workers and families who suffer the most. Although the Government would like to pretend otherwise, the tariff uncertainty is happening as working people are dealing with an unprecedented cost-of-living crisis. Households are hit by soaring grocery prices and energy costs and record rents, and we saw yesterday how motorists are being fleeced by sharp increases in motor insurance. It is all going in one direction and that direction is up. To add insult to injury, just last week, the Government, in its wisdom, heaped more pressure on those families by increasing carbon tax, making it more expensive for those families to heat their homes and cook their food. It is madness in the context of a cost-of-living crisis. Ordinary people are already struggling and cannot afford a tit-for-tat tariff war. With all the pressure on households, what the Government has done is to rule out a cost-of-living package in the October budget. It appears the message from Government is that working people are on their own.

If that was not enough for working people to worry about, they heard from the Fine Gael Parliamentary Party that the prospect of countertariffs from the EU means that the Government may need to take difficult decisions. The Tánaiste talks about difficult decisions. Unfortunately, the Irish people are all too familiar with difficult decisions. They have seen them time and time again. Just last week, we saw the Government prioritised CEOs and political insiders on massive salaries while ordinary workers were asked to wait longer for pay increases to bring them to a living wage.

What assessment has the Tánaiste's Department done of the impact on prices and jobs from increasing tariffs and EU countermeasures? Can he assure the public that their interests and Ireland's interests will be reflected in the EU response to be announced today and that the all-Ireland economy will be protected? Does he accept that Irish people are living through a cost-of-living crisis and that certainty is needed that there will be a cost-of-living package in this year's budget?

Comment on this
Simon Harris The Tánaiste Fine Gael

I will begin where the Deputy began on trade, tariffs and the all-island all-Ireland economy. This morning, I spoke to the Deputy's colleague, my counterpart, the Minister for the Economy in the Northern Ireland Executive, Dr. Caoimhe Archibald. I thank her for ongoing engagement with me and for the way she is going about her business. We have agreed to meet by way of video conference either tomorrow or Monday once we have clarity on what is in the UK-US agreement. I use that word loosely because, quite frankly, we do not know at this stage if it is a full agreement. I have heard speculation that it is the heads of an agreement or a framework. It is important that we see what comes from that later today.

In all my engagements with the British Government, including when I met the Secretary of State for Northern Ireland 11 days ago, and in all my engagements at the European level, I am very clear that the unique position of this island and the north of this island needs to be factored into all discussions at EU level and with the US and in our ongoing discussions with the British Government. Of course, we can all point to the Windsor Framework and different mechanisms but to do so is to miss the point. Tariffs are not a good idea, full stop. The trade that happens across this island, between these islands and between this island and the US matters. I am absolutely committed to working in good faith with the Minister, Dr. Archibald, and with the Northern Ireland Executive. I know the Minister is also committed to doing so.

A number of things are going to happen this afternoon. The EU's response or next steps must be seen through the prism of four measures. The first and most important to note is that the European Union, of which Ireland is a proud member, wants to negotiate. We do not want to be in a tit-for-tat tariff war. I agree with the Deputy on that. Tariffs are bad for everybody. There are no winners in a tariff war. I therefore believe the EU is right to have intensified its engagement with the United States in recent days and in the proposals we are making to find a way forward. The Deputy's question is a fair one: do we have interlocutors who are willing to do a deal? We have to keep working on that. We have to support the work of Maroš Šefčovič, the EU's Commissioner for trade, who is doing a very good job in this area. That is step one. We must reach out with proposals, engage in good faith, try to get an agreement and use the 90-day pause.

The second measure is countermeasures. I take the point that tariffs are not good for anyone. I get that. That is absolutely true. However, from a negotiating point of view, we do have to negotiate from a position of strength. Irish people get that. We cannot go into talks with our hands swinging and asking nicely for a deal. We have to say that we want a deal and want zero tariffs for zero tariffs but that the European Union is a market of 460 million people and will look at responding in other areas if we have to. It is important to say a couple of things about the list of countermeasures that will be published today. The first is that it is going to be a very long list. The second is that none of this will come in anytime soon. It will go out for public consultation until at least 10 June. Even when that public consultation closes, the Commission will need to do more work before it even reaches a decision-making mechanism within the European Union. We need to apply the "cool heads" the Deputy mentioned to our response to the countermeasures. Ultimately, I want to see the countermeasures list ripped up and never coming into effect because we have reached an agreement. The third measure the European Union should consider and that I expect it will is to take a dispute to the WTO. The United States is not in compliance with World Trade Organization rules. Rules matter and membership of the WTO matters. The fourth measure we have to take at European level is to continue to watch for what is often called "dumping", which is the idea that lots of extra goods may come to our markets from other parts of the world because of actions taken by the US.

I expect the EU to also monitor this very closely. Those are the four areas where we are likely to see monitoring.

I would like to offer Opposition parties a further briefing with the Government next week. We should continue to work hand in glove on this. I will also attend the meeting of EU trade Ministers in Brussels next Thursday.

Comment on this

I thank the Tánaiste and we will definitely take him up on that briefing. There are two points here. We know that tariffs increase prices on consumers but even if there were no tariffs there is a cost of living crisis. I really think that the Government does not get it. Whatever way the Government dresses it up, last week it actually heaped more pressure on families through the carbon tax. It makes it more expensive for people to heat their homes. It makes it more expensive to cook their food. This is at a time when they are struggling with grocery prices, rent, insurance and so on.

With regard to the countermeasures that come from the European Union, I presume the Tánaiste's office has been engaged with them or has had sight of them. Will he give us an early assessment of the impact of those measures in Ireland, if they were to come to pass? We all hope that they will never come to pass? However, the Tánaiste told his parliamentary party meeting that we may face difficult decisions, so I am very concerned. In the past, the Government used the issue of tariffs in the context of low-paid workers having to wait longer while at the same time the Government is preparing to increase CEO salaries right across semi-State boards, and protecting the insiders such as we have seen in terms of Brendan McDonagh's salary and all of the rest. I want the Tánaiste to answer that question. I presume he has seen the countermeasures coming from the European Union. Are they in Ireland's interests? From his initial assessment does he believe they protect the all-island economy or do they challenge it further?

Comment on this
Simon Harris The Tánaiste Fine Gael

If we get to a place where countermeasures have to be introduced by the European Union, this will not be good for the European Union and it will not be good for the US. It will not be good for the economies in Europe or in the US because it is almost impossible to publish a list that does not have an impact in every single member state. The list will be broad, and it will include industrial products and a whole variety of issues. I expect it to run to more than 200 pages. I have not formally seen it and it will have to be assessed. It will take a period of time to assess it but there is the time. Unlike President Trump, we are not saying "Here is the list and it comes in tomorrow or in 30 days". We are saying that here is a list of measures we do not want to take, that we want to have them prepared in case, and that we want to consult and we want to engage. There will be consultation until at least 10 June so nothing will change in the here and now.

Yes, I did tell my parliamentary party what I tell the Irish people and what I did say during the general election, and what the Minister for Finance, Deputy Donohoe, says regularly too, that if we get to a situation where President Trump's agenda of high tariffs and protectionism takes hold and there is no improvement, that will have an effect on our economy. We do have to navigate that challenge. The Deputy asked what this effect looks like. In fairness, it is outlined in the progress report published by the Minister yesterday in terms of what the economic growth looks like, what job creation looks like and the different levels we would be at in that scenario compared to a scenario where there is a free flow of trade. We will keep working at this calmly and, as the Deputy said, with cool heads.

Comment on this