Tens of thousands of jobs are at risk with billions potentially wiped off the economy if Donald Trump’s tariffs take effect, the Government has been warned.
The Economic and Social Research Institute (ESRI) think tank published on Friday a report that assesses the impact of protectionist policies such as tariffs on the Irish economy.
Dr. Paul Egan, an author of the working paper and a research officer at the ESRI, told Extra.ie almost 70,000 jobs could be at risk.
He said that based on the assumption that GDP will be €600 billion in seven years’ time, a 3.5% fall would lead to a loss of €21 billion.
Dr. Egan also said that in the more "severe scenario" you would see employment falling by 3%.
Based on current employment figures that would amount to over 69,000 jobs.
He remarked: "You are probably talking about 2.3 million people employed right now and you reduce that by 3%, that’s what you’re looking at."
"Severe scenario"
He added: "Our research shows that protectionist policies have the potential to significantly impact the Irish economy, with the traded sector disproportionately affected. This, in turn, would lead to a significant impact on the labour market, consumption and the domestic economy as a whole.
"Protectionist policies may also prompt multinationals to relocate to the US, posing further risks to the Irish economy and public finances," he warned.
The paper also highlights that the concentrated nature of corporation tax revenue in Ireland makes it difficult to forecast accurately how tariffs would affect the tax intake. It warns: "Protectionist policies therefore that target specific sectors that are important to the Irish economy, would have a disproportionate negative impact on tax receipts.
"This can be viewed as an additional risk to Irish public finances."
"Significant period of turbulence"
On Thursday, Tánaiste and Trade Minister Simon Harris warned Ireland is highly likely to face a very "significant period of turbulence" in the face of threatened tariffs by the American president.
The Fine Gael leader said that Ireland will have to "engage" with its foreign direct investment. However, he also told the Dáil that regardless of who is in the White House, many US multinationals still want to do business in an EU market.
Speaking in the Dáil, Mr. Harris said: "We are highly likely to face a very significant period of turbulence. We have got to control what we can control in terms of what we can do here in Ireland.
"We have got to work as part of and as members of the European Union where, of course, trade policy is at."
Mr. Trump has imposed tariffs of 25% on all steel and aluminium imports from the European Union.
In turn, the EU has imposed what it calls "countermeasures" on goods worth up to €26 billion.
The retaliatory measures include Brussels reimposing tariffs on US goods including bourbon whiskey, jeans, and Harley-Davidson motorbikes, which it introduced during the first Trump term and later suspended after talks with his successor, Joe Biden.
However, those measures were paused on Thursday, with the EU saying it wanted "additional time for discussions" with the US.
The tariff scenarios considered in the ESRI paper show that levels of Gross Domestic Product and Modified Domestic Demand could fall by as much as 3.5% and 2% respectively below a no-tariff baseline over the next five to seven years.
The paper suggests that if US protectionist measures target specific sectors that are important to the Irish economy, this would "likely be even more severe than our scenario analysis suggest."
*This article was originally published on Extra.ie.
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