PLANS TO APPLY tariffs on trade with the European Union announced by US President Donald Trump last night will have rung alarm bells in Government Buildings, and in the offices of Irish-based pharmaceutical firms. 

Yesterday, the US unveiled plans for “reciprocal” tariffs on goods from the EU – and other trading partners – in order to balance out the trade deficit between the two economies. 

The Irish pharmaceutical sector contributes most to the Ireland-US deficit, and Trump’s suggestion that VAT, which is higher in the EU, may be taken into account could be particularly damaging.

EU tariffs on US goods are not very high as it stands, but Trump’s indication that he could take VAT into account could mean the proposed US tariffs are more than “reciprocal”. 

Taoiseach Micheál Martin recently said that US “tariffs would hurt us”. 

Ireland sells more goods to the US than to any other country, with a total value of €54bn in 2023.

Pharmaceuticals account for €36bn of that total, with much of those exports made by US companies.

Ireland’s current trade surplus in goods with the US is around €31bn.

Trump’s latest announcement is another dramatic move in the sweeping trade war policies aimed at both allies and adversaries that he has signalled since his election campaign. 

Since taking office, Trump has announced a broad range of tariffs targeting some of America’s biggest trading partners, while saying the EU in particular has treated the US “very badly”.

However, Canada and Mexico have managed to appease the US president, at least temporarily, after offering him concessions on border policies.

Speaking in the Oval Office yesterday, Trump said he had decided to impose reciprocal duties, telling reporters that US allies were often “worse than our enemies” on trade.

“Whatever countries charge the United States of America, we will charge them,” Trump added.

In particular, he called the European Union “absolutely brutal” in trade ties with Washington.

The levies would be tailored to each US trading partner and consider the tariffs they impose on American goods, alongside taxes seen as “discriminatory,” such as VAT, a White House official said on condition of anonymity.

With Trump’s memo, officials including the US trade representative and commerce secretary will propose policies on a country-by-country basis.

Trump’s commerce secretary nominee Howard Lutnick said that studies should be completed by 1 April, and the president could start tariffs as early as 2 April.

Washington will begin by examining economies with which the United States has its biggest deficits or “most egregious issues,” the White House official added.

“This should be a matter of weeks, in a few months,” the official said.

With reporting from AFP