Irish pharmaceutical exports to the United States are projected to drop by half over the next five years in the event of a trade war between the European Union and the US, officials have estimated.
As the EU braces for the announcement of a raft of tariffs by the Trump administration on Wednesday, the Cabinet will be told today that Irish exports would drop by 50 per cent by 2030 if the US goes ahead with an expected 20 per cent tariff and the EU retaliates with a similar move.
That would likely cost the Irish exchequer several billions of euro in lost revenue.
Tánaiste and Minister for Foreign Affairs Simon Harris will brief ministerial colleagues at today’s Cabinet meeting after he held a series of discussions with his European counterparts in recent weeks.
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Officials in several government departments have also been attempting to assess the likely economic implications of expected moves by the Trump administration and retaliation by the EU.
The Government hopes that following the announcement of tariffs on Wednesday the EU and US can move to a period of negotiation, rather than enter a tit-for-tat trade war.
But this may depend on the severity of what the US announces. While a general tariff of between 20-25 per cent is expected, there may be additional tariffs announced or signalled for the future on a number of sectors, including pharmaceuticals.
Mr Harris is to attend a summit of EU trade ministers in Luxembourg on Sunday when they are expected to make decisions on how the EU would retaliate to any new US tariffs.
Later today Mr Harris is to hold trade talks with the Italian foreign minister Antonio Tajani.
[ US tariffs: Ireland to bolster competitiveness ahead of looming trade warOpens in new window ]
On Monday Taoiseach Micheál Martin said the Irish and European view was that “tariffs are bad for the economy” and “will negatively impact on economic growth across the world”.
He said he hoped talks would take place and that “a landing zone suitable to everybody could be arrived at through negotiation and dialogue between the European Union and the US”.
Separately, Minister for Public Expenditure Jack Chambers is to brief Cabinet on the process of updating the National Development Plan.
The review of the plan is said by a source to have “taken on greater significance” in the context of threatened US tariffs and their potential impact on the Irish economy.
Mr Chambers is expected to tell colleagues that the best way to safeguard against the effects of the tariffs is to focus investment in capital public projects and to tackle infrastructure deficits.
This is seen as “critical” for boosting economic growth and enhancing Ireland’s competitiveness.
There is to be a particular focus in the review on supporting housing provision as well as greater investment in energy, water, transport infrastructure and health digitalisation.
The review of the development plan is due to be completed in July.
Ministers will be asked to identify projects that can be delivered on time and in budget, with a particular focus on achieving value for money.
