Pharmaceutical exports could be cut by half if tariffs apply, Tanaiste warns
Simon Harris said the tariffs were regrettable and ultimately bad for consumers.
Export of pharmaceutical products from Ireland to the US could reduce by around a half if the US President imposes a 20% tariff and the EU responds by applying the same tariff, the deputy Irish premier has said.
Simon Harris warned that over a five-year period there could be a “very significant” reduction of pharmaceutical products, but said he does not want to be in the space of the EU applying 20% tariffs.
Speaking in Dublin on Tuesday, Mr Harris said the trade relationship between the EU and the US is worth 1.6 trillion euro every year.
Mr Harris is bringing a memo to Cabinet setting out the potential economic impact on Ireland, ahead of Donald Trump’s announcement to introduce tariffs on EU countries.
Around 45,000 people are employed in Ireland’s pharmaceutical companies, while some 58 billion euro in pharma and chemicals is exported from Ireland to the US every year.
Mr Harris warned that Ireland and the EU is facing one of the “biggest economic challenges”, which will have a generational impact.
“As soon as tomorrow, we’re highly likely to see a series of announcements from President Donald Trump in relation to trade and tariffs,” Mr Harris said.
“I think this will seek to fundamentally alter the trade relationship between the European Union and the United States of America, and I think it is regrettable, in advance of even seeing the detail, because tariffs are bad for consumers.
“They push up the cost of doing business, they push up the cost of goods, and we have built successful economies on both sides of the Atlantic on the basis of trading in goods and services.
“I think it is really important in the days ahead, though, that the response from Ireland and the European Union is calm, is measured and is strategic.
“Crucially, though, this has to be about getting to a point of negotiation. Every disagreement ultimately has to end in an agreement, has to end with people getting around the table, and I certainly hope that what the EU response will do is allow time for meaningful engagement to find a way forward that is good for Europe, good for Ireland and good for the United States.
“Pharma companies and companies are here because they do very well. In fact, about 60% of what they’re exporting is going into the European Union. In other words, they need a presence in Europe.
“We have a significant presence of pharma companies here. Of that, there’s no doubt, employing around 45,000 people. But we’re not completely isolated in relation to this, and that’s why, over the last number of days and again, today, I’ve been talking to colleagues in the European Union, who also have a large pharma industries.”
He added: “In theory, over a five-year period, if the EU imposed a tariff of around 20% and the US imposed a tariff around 20% you could, over a five-year period see a very significant reduction up to around half in the amount of pharmaceutical products we’re exporting.
“But again, I want to emphasise the point. We don’t want to be in that space. We don’t want to be in a space where we’re seeing 20% tariffs in the EU.
“We don’t want to be in a space where we see tariffs to the US. We want to be in a space as a European Union, where we can sit down with the United States of America, our economies are interdependent.
“It’s a trade relationship worth 1.6 trillion euro between the EU and the US every year.
“No president of any political persuasion can ignore that reality. It’s a huge, huge, huge impact on both sides of the Atlantic.
“We’re about to face one of the biggest economic challenges, and how we steer our country through these challenges in the days, weeks and months ahead won’t just impact us for the next few years, will impact us for the next generation in terms of our economic model.”
Meanwhile, Irish premier Micheal Martin said that Ireland and the EU must try to avoid “worst case scenarios”.
“What is clear is there will be, even after negotiation, there will be some level of tariffs still in place. The issue now because it’s then – how high?
“Then it’s matter for the Irish economy and the European economy to adapt to that, diversify our markets, look at our competitiveness, both within Ireland and within the European Union, there are a lot of measures we can take, but fundamentally, the old order is changing in terms of the economic model.”
He added: “I think the entire tariff initiative is, as I said, it would be damaging to the entire world economy, to the US economy, in my view, and to the European economy and to Ireland.
“So we’ve got to try and mitigate it as much as we possibly can limit the damage and avoid worst case scenarios.
“There will be a lot of consultation within the European Union on this issue, to endeavour to get to a strategic response that doesn’t bring more damage.
“Economists are fairly strongly of the view that it needs a calm, collective sort of measured response to make sure we don’t feel damage to ourselves in the process.
“There is a lot of uncertainty being created. There’s a lot of instability being created in the financial markets, which in itself, can have damaging impact on investments.”
Social Democrats TD Sinead Gibney said “we do not want to see a tit for tat war”.
“This is being compared by some to Brexit but we appreciate that this is much more complex.
“It’s much more sudden than Brexit but also it has all EU member states affected by it, whereas Ireland was obviously uniquely impacted by the economic fallout from Brexit. So it’s really important that we use that influence as best we can.”
