Tuesday 16 July 2019

Trump's economic chief: We will not suck factories out of Ireland

EXCLUSIVE: Top White House adviser defends Trump's attack on Ireland's 'chronic' trade surplus with America

Kevin Hassett, who will address business executives in Dublin this week, said President Donald Trump was right to call out the Irish trade deficit. Photo: Getty Images
Kevin Hassett, who will address business executives in Dublin this week, said President Donald Trump was right to call out the Irish trade deficit. Photo: Getty Images

Dearbhail McDonald Group Business Editor

The chief economist to the White House says that sweeping reforms to the US corporate tax code, the largest in 31 years, will not result in an exodus of investment and jobs created by US multinationals in Ireland.

Kevin Hassett, chairman of the powerful Council of Economic Advisors (CEA), spoke to the Sunday Independent ahead of a controversial visit to Ireland in November by US President Donald Trump.

Trump has repeatedly criticised Ireland's "chronic" trade surplus with the US, which is largely dominated by a high level of pharmaceutical exports from Ireland to the US by American drugs firms.

"I don't think we should think of it [Trump's trade agenda] as sucking factories out of Ireland," said Hassett, adding that it was "extremely unlikely" that companies would close or stop maintaining and growing their subsidiaries here. However Hassett, a former Federal Reserve economist, said that the new reforms, which saw the US reduce its corporate tax rate from 35pc to 21pc - and targeted the foreign profits of US multinational corporations - will result in more US companies choosing America for new investments.

US firms employ 155,000 in Ireland, with 40pc of the corporate tax take - a record €8.2bn last year - coming from just 10 firms. More than half of the largest taxpaying firms in Ireland are American.

Ireland, whose companies employ 100,000 in the US, is now the ninth-largest supporter of FDI to the US economy.

Hassett (56) said that President Trump was "right" to call out the Irish trade deficit, which he says will close in the following years as new pricing transfer rules take effect.

"The benefit of locating tax profits in Ireland has declined sharply for US multinationals and that should reduce the trade deficit significantly," said Hassett, who will address the US Embassy-sponsored US-Ireland business summit this week.

The visit by Hassett will set the scene for the forthcoming arrival of Trump, who will travel to Ireland on the way back from the Armistice Day commemorations in Paris.

Last Friday, Tanaiste Simon Coveney said the surprise visit will be controversial.

"The fact we are facilitating a visit from the US president doesn't mean it is an endorsement of US policies or the policies of this current president," said Coveney."We don't agree with Donald Trump in terms of his approach to climate change, we don't agree with his approach with migration, we don't agree with his approach in terms of international trade, and the imposition of tariffs, we don't agree with the US's approach to elements of its Middle East policy."

Taoiseach Leo Varadkar, who will also address the event, said there was "enormous divergence" between the position of the Irish Government, the EU and the US on issues such as free trade.

But he insisted that Ireland and the US will seek to maintain and deepen their economic and cultural ties.

Sunday Indo Business

Also in Business