US multinationals based in Ireland take decisions based on a “longer view” than the four-year cycles of United States presidential administrations, Minister for Finance Jack Chambers has said.
The Fianna Fáil minister made his remarks as the Government braces for potential economic shocks from a second Donald Trump presidency.
There is concern among Irish officials that the new Trump administration will have states such as Ireland in its crosshairs, as it is seen as a big beneficiary of foreign direct investment from US multinationals in the tech and pharmaceutical sector.
On the campaign trail Mr Trump and some of his key economic advisers spoke about plans to rebalance the world economic order, bringing jobs created by US companies overseas back to the US. The incoming administration has warned it will introduce sweeping tariffs on goods imported into the US from elsewhere, as well as cut corporation taxes.
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Speaking on Monday, Mr Chambers said the Government was hoping to avoid the US and the European Union falling into a cycle of “tit for tat” retaliatory measures that could lead to a trade war.
A protectionist shift from both powers to hike tariffs on imports from the other would put “significant costs and burdens” on ordinary people in the US and Europe, he said.
Mr Chambers said multinational companies deciding to repatriate their intellectual property back to the US from the Republic would have an impact on the amount of corporation tax they paid in Ireland.
“I think a lot of companies domiciled in Ireland take a longer view than one particular [US] administration ... But clearly if intellectual property is moved, that could have consequences for corporation tax,” he said.
“We know that there is overall volatility of corporation tax receipts, that isn’t something that’s changed because of a new US administration,” he said. That risk was there due to a small concentration of big multinationals accounting for significant portions of the total amount of corporation tax paid in the Republic, he said.
The Fianna Fáil minister, who is tipped to become minister for public expenditure in the next government, said spending plans would be adjusted if the country’s economic position changed.
Mr Chambers said the incoming government needed to be “flexible and agile” to adapt to what would be a more “uncertain international environment”, with Mr Trump returning to the White House for another four years.
Ireland favoured the EU having “constructive and early engagement” with the new Trump administration, to try to avoid escalatory tariffs on trade, he said.
“We value free trade and international trade and we want to promote that as a core European value, which benefits all citizens across the European Union,” he added.
Mr Chambers was speaking in Brussels on his way into a meeting of EU finance ministers, which is expected to discuss the possible economic fallout from the new Trump administration.
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