A Government analysis on the impact of Donald Trump’s proposed tariffs warned of a decline in GDP of up to 4 per cent and a drop in employment by more than 3 per cent.
The research modelled multiple possibilities including unilateral tariffs, a trade war with the European Union, or a wider trade war. It said every single scenario would have “significant negative implications” for the Irish economy.
The unpublished analysis said GDP could be expected to fall by between 2.75 and 4 per cent over the medium term.
The employment decline would be between 2.5 and 3.25 per cent, while domestic demand would drop between 1.75 and 2.5 per cent.
RM Block
It also warned of price-level increases of between 2 and 3 per cent and said the modelling may underestimate the actual impact.
The research said of the models: “They do not fully account for several important indirect channels. Scenarios focus exclusively on the potential impact of tariffs.
“The results do not incorporate the potential impact of broader measures such as changes to the US tax code to encourage the reshoring of investment.”
The analysis was prepared within the Department of Enterprise, Trade and Employment as they geared up for a second Trump presidency. Trump unveiled a raft of tariffs soon after he regained the White House, announcing a string of levies in April 2025 on what he described as “liberation day”.
The analysis said Ireland’s dependence on corporation tax made the country particularly vulnerable to changes in tax policy in the United States.
The paper warned of “undertaxed profits” in the US being collected from group subsidiaries in other jurisdictions.
It added: “Broader measures, such as Technical Services Withholding Taxes, pose a threat to Ireland’s tax base as they could target a significant amount of outbound payments for services.”
Ireland was more exposed than other countries in Europe when it came to exports to the United States, the paper explained.
It said: “The impact on total trade flows to and from the US is approximately three times larger for Ireland compared to the overall EU impact – due to the much higher share of trade accounted for by the US in Ireland.”
The analysis said between 110,000 and 160,000 workers were in sectors classed as having “significant” or “high” exposure to US trade.
The paper said this represented between 3.9 per cent and 5.7 per cent of total employment in the State, rising to 12 to 14 per cent when services trade was included.
The most exposed goods sectors included pharma, tobacco, organic chemicals, professional and scientific apparatus, and beverages.
The analysis added that US firms operating in Ireland employed 178,000 people in 2023, including more than 93,000 in ICT and almost 20,000 in pharmaceuticals.
It said US companies had Irish payroll costs of €16.1 billion in 2022, with an average payroll cost of €79,100 per worker.
