"Liberation Day" is all downsides for Ireland

The Government grasped some optimism from a surprisingly upbeat call between arch-Ireland critic and US Commerce Secretary, Howard Lutnik, and Tánaiste Simon Harris earlier this week.

But Cabinet sources acknowledged the aftermath of Donald Trump's so-called 'Liberation Day' will be "all downside for Ireland".

One senior minister said: "The Tánaiste had a good call with Lutnik. It was genuinely constructive. Lutnik is a highly successful person and was a trader with Cantor Fitzgerald.

"His whole background is global trading and capitalism working in an open way. We were encouraged."

However, despite the positive call, Mr Lutnik could not provide any clear indications of the level or focus of new US tariffs due to come into effect on Wednesday and the extent to which they will impact the Irish economy.

Cabinet sources last night admitted the Government is in the "dark on both sides".

One minister said: "There is dialogue and engagement with the Donald Trump administration and with the European Union, but the EU still ultimately has the delegated and centralised function to decide what the trade response will be for it as an EU bloc.

"And we will only see that on Wednesday. So, in that way, we're somewhat blinded on both sides."

Another minister admitted that, no matter what "scenario planning" is done, the Government concludes it is "all downside".

A Cabinet source said: "The impact of what the United States does next week, and then the EU response, could be moderated with engagement and dialogue.

"The way we see it, it could go from marginal to being quite a serious economic shock. It has that bandwidth in it; that's why the scenarios can be quite varied, depending on what will happen."

Ahead of what President Trump is describing as 'Liberation Day' for the US, the Government and the EU are anxiously watching what emerges from his frequent Oval Office press conferences.

One minister noted: "Ireland is being mentioned a bit too often and a bit too specifically for our liking. But the upside of next week, April 2, is that we finally get certainty.

"We get to find out what the US plans to do tariff-wise, exactly, and then we get a response from the EU. The hope - indeed the expectation - is that there will be some kind of timelag and we can use that window for negotiations."

Nevertheless, several Cabinet sources said they are deeply "concerned" for Ireland's economic future in the event of a full-blown international trade war.

A Government source who was also in office during President Trump's last term noted that "this administration is a totally different prospect than the last one".

They added: "There are different, more ideological people there now and whatever happened last time, we were never as economically concerned for Ireland as we are now."

Mr Harris spoke to Mr Lutnik at 1.30am on Tuesday, after which he briefed his Cabinet colleagues on the call.

Taoiseach Micheál Martin, Finance Minister Paschal Donohoe, Public Expenditure Minister Jack Chambers met with Mr Harris on Tuesday to discuss "scenario planning."

A senior Government source familiar with the meeting of the four senior ministers said: "Some of what was discussed on the wider consequences for the macroeconomic side have been published.

"They were discussing the concentration risk, for pharma and tech in particular, which could be caught in the crossfire between the US and the EU, which presents a particular risk for Ireland and obviously our revenue base.

"There is scenario planning. Some of that is the worst-case scenario, that mightn't hit immediately, but we know from other trade disputes that has that kind of medium-term effect that comes from uncertainty.

"Because we don't actually know what exactly will be applied on April 2, it is still hypothetical. Also, by extension, we don't know what the EU will reciprocate with."

A spokesman for Mr Harris last night said the Tánaiste - who also oversees trade - will ramp up diplomatic engagement with counterparts across Europe in the coming days ahead of "an expected significant escalation of the global trade dispute with the US".

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Tanaiste (Deputy Prime Minister) Simon Harris.

The spokesman said: "With President Trump set to announce new tariffs on Wednesday, the Tánaiste will engage bilaterally with a number of EU foreign and trade ministers to share insights and ensure ongoing unity across the bloc."

As well as further contact with EU Trade Commissioner Maros Sefcovic, whom the Tánaiste has already spoken with, Mr Harris is expected to hold calls with the Dutch and Swedish trade ministers, as well as the Danish and Italian foreign ministers.

He will also hold a working lunch with the Croatian foreign minister in Dublin today.

The Government does not expect to be fully briefed on the EU response to 'Liberation Day' until the Tánaiste represents Ireland at a special EU Trade Ministers meeting in Luxembourg on April 7.

This will be a key gathering in terms of the next steps in response to the threatened US tariffs.

The Tánaiste is understood to be planning a possible trip to the US next month where he will seek to engage with key political figures. Mr Donohoe is also due in the US next month.

* This article was originally published on BusinessPlus.ie.