Tuesday 15 October 2019

Ireland will be hit in any US-EU car smash


Car component-makers here would be hit by US tariffs
Car component-makers here would be hit by US tariffs

David Chance

We might not make cars any more, but any move by President Donald Trump to impose auto tariffs would trigger a deep trade war between the European Union and the United States, in which the economy here would be hurt.

President Trump has to weigh up whether he will impose the tariffs, now that an investigation into whether imports are damaging US security has been completed.

For the EU economy, the direct effect of higher US import taxes on cars would be small, with a hit of just 0.1pc of gross domestic product, according to investment bank ING.

Even in Germany, cars are no more than 4pc of gross domestic product, ING says.

The risk to Ireland comes from EU retaliation. If Washington imposes $23bn (€20bn) in tariffs on cars, then Europe will respond in kind.

There are also some component-makers here that could be caught in the crossfire.

Carlow-based Autolaunch sells interior lighting units to car manufacturers in the US, Galway's Valeo Vision Systems makes rear camera and surround view systems and autonomous driving products, while Mergon in Westmeath moulds materials for cars.

The economy's strong recovery since the crash has largely been down to exports, 80pc of which come from chemicals, pharmaceuticals and electronics. These have a high degree of dependency on the US, whose multinationals have also been behind a surge in tax payments that generated a budget surplus in 2018.

If a 'hard Brexit' cuts economic growth here to just 1.5pc, as the Central Bank believes, then a trade war on top of that would push us into recession.

Irish Independent

Also in Business