Trump’s tariffs could see up to 25,000 fewer jobs created in Ireland

Reuters

Irish economic growth is expected to slow to 2 per cent this year if a 10 per cent tariff on US imports from the European Union remains in place, or 2.5 per cent if tariffs are removed, the Department of Finance forecast on Tuesday.

The department also warned that there would be 25,000 fewer jobs created in the economy, with the labour market growing at a slower rate than would have been the case in a non-tariff scenario.

Ireland is among the countries most exposed to sharp policy changes proposed by US president Donald Trump, with a significant proportion of employment, tax receipts and exports dependent on a cluster of US multinational firms.

The updated estimates compare to a forecast before Trump's election that modified domestic demand (MDD) – officials' preferred way to measure the economy rather than GDP – would grow by 2.9 per cent in 2025 and similarly in 2026. MDD grew by 2.7 per cent last year.

The department said MDD growth would slow further to 1.75 per cent next year if the tariffs are still in place or expand by 2.8 per cent without them. It said it truncated the updated forecast horizon to the end of 2026 due to the elevated uncertainty.

It added that employment growth would slow to 1.75 per cent this year and about 1 per cent next year if the trade barriers remain.

As a member of the EU, Ireland faces tariffs of 10 per cent on many of exports that could rise to 20 per cent after a 90-day US pause ends on July 8th. Brussels has suspended countermeasures to give room for talks, with limited progress seen to date.

Research co-authored by the Department of Finance found in March that the Republic faces a disproportionate hit from tariffs which, if permanent, could cause MDD to be as much as 1.8 per cent smaller than it otherwise would be by 2032.

The State faces additional risks from planned US tariffs on pharmaceuticals and potential US corporate tax reform, both of which could hit booming corporate tax returns that have delivered the healthiest public finances in Europe.

Separate data on Tuesday showed fears over future growth pushed Irish consumer sentiment sharply down for the second successive month in April to its lowest level in two years.