Ireland will be worst-hit by US tariffs, says IMF
Economists warn fallout will wipe out €235m of Irish exports to America as Trump ramps up trade rhetoric
The Irish economy will be hit three times harder than Germany and worse than any other developed nation if the US imposes a blanket trade tariff, the IMF has warned.
A new study from the International Monetary Fund (IMF) put Ireland top of a list of countries that will be worst hit by US tariffs.
The study models the impact of a potential 5pc tariff imposed across the board by the US. It was released yesterday amid a series of trade disputes that have pitted the United States against China and against some of Washington's closest allies, including the EU.
Ireland's goods exports, it calculates, would fall by more than 0.6pc.
That's more than three times the drop experienced by Germany, which is the target of Donald Trump's threat to impose tariffs "until no Mercedes models rolled on Fifth Avenue in New York" as part of his bid to get more of the products sold in the US built there by American workers.
Based on last year's exports from here to the US that figure is equal to lost exports of €234m.
In May, a report by the Commerce Department stated that imports of foreign-made cars were "weakening our internal economy" in a way that was damaging the economic security of the United States, highlighting a drop in the share of the car market held by US owned companies to just 22pc now from 67pc in 1985.
President Trump has delayed bringing in the tariffs on car imports for six months in order to give the EU, Japan and other major exporters a chance to negotiate on the issue.
The EU is the most export-exposed bloc of any of the world's major economies and Brussels has said it will respond to any US tariffs with levies on imports of US goods.
"About 70pc of European exports are linked to supply chains. Therefore, shocks affecting existing trade flows between the major trade hubs - the United States, China, and Germany - could affect European economies through those supply chains," the IMF report said.
Ireland's exposure to the car industry is tiny but the State's exports to the US are huge. The Irish Whiskey Association, for example, has already warned of the potential for damage to the industry here from tariff escalations. Ireland is a key part of the global supply chains that now criss-cross the world, with manufacturers here shipping goods globally, such as semiconductors or pharmaceuticals.
Some 28pc of the €140bn of goods exported each year go the US, but medical and pharmaceuticals, whose output is dominated by US companies, accounted for a third of all exports.
As well as accounting for a huge chunk of exports, multinational firms accounted for 77pc of the €10.4bn in company taxes paid last year.
Washington has already signalled its displeasure with Ireland over trade, adding it to a list of countries that are on a currency manipulation watch - which means they believe that the country has deliberately engineered a weak currency against the dollar so as to win market share.
Germany and Italy were also on the list among countries that use the euro. Most economists agree that the exchange rate at which Germany joined the euro was too low and say that it has given German exporters a huge advantage.
The apparent peace between Washington and Brussels on trade just now is down to a truce struck last year by Jean-Claude Juncker in a meeting with Mr Trump.