Ireland is bracing for potentially significant tariffs on exports to the US after its president, Donald Trump, unveiled a new plan of reciprocal tariffs and suggested those on pharmaceuticals could follow in the months ahead.
While EU tariffs on US imports are not particularly high, Mr Trump said he would take higher VAT charges in Europe into account, potentially leading to significant charges on EU exports and a damaging trade war.
Separately, Mr Trump said that as part of a future programme he would target pharmaceutical imports for special tariffs, potentially threatening the sector responsible for the bulk of Irish exports to the US.
No indication was given of the scale of what might be applied to pharmaceutical products, which would be crucial to the economic impact on Ireland.
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Addressing that point specifically at an Oval Office press conference on Thursday, he said: “What it’s going to do is bring pharmaceuticals back to our country; much more important than the money.
“It’s a lot of money, but it’s going to bring pharmaceuticals back to our country, it’s going to bring chips back to our country, it’s going to bring automobiles.
“China and other places — we want to get the pharmaceutical and drug business back into the United States, where it should be.”
[ Cliff Taylor: Here’s why Ireland is on Donald Trump’s tariffs hit listOpens in new window ]
Senior sources in Dublin said the potential inclusion of VAT in Washington’s calculation of tariffs on EU imports was concerning as this could be used to justify significant charges.
However, it remains to be seen how the proposed measures will progress with negotiations likely between Washington and Brussels.
The EU has already indicated it would cut import tariffs on US cars, a point welcomed by the US president.
Mr Trump’s instruction to administration officials to consider imposing reciprocal tariffs on numerous trading partners has raised the prospect of a wider campaign against a global system he complains is tilted against the US.
He signed a measure directing the US Trade Representative and Commerce secretary to propose new levies on a country-by-country basis in an effort to rebalance trade relations — a sweeping process that could take weeks or months to complete.
Howard Lutnick, Mr Trump’s nominee to lead the commerce department, told reporters all studies should be complete by April 1st and that the president could act immediately afterward.
Fresh import taxes would be customised for each country, meant to offset not just their own levies on US goods but also non-tariff barriers the nations impose in the form of unfair subsidies, regulations, value-added taxes, exchange rates and other factors that act to limit US trade, said a White House official, who briefed reporters before the announcement.
“I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,” Mr Trump said in the Oval Office. “In almost all cases, they’re charging us vastly more than we charge them but those days are over.”
Mr Trump told reporters that he would enact import taxes on cars, semiconductors and pharmaceuticals “over and above” the reciprocal tariffs at a later date.
The text of Mr Trump’s directive on tariffs was not immediately provided by the White House. Mr Trump cited barriers in the EU, including VAT, as an example of what the US is looking to respond to, while the official said Mr Trump has also singled out Japan and South Korea as nations that he believes are taking advantage of the US, and thus could be targeted in his latest push.
Reciprocal tariffs would amount to Mr Trump’s broadest action to address US trade deficits and what he characterises as unfair treatment of American exports around the globe.
He has already imposed 10 per cent tariffs on Chinese goods and plans to apply 25 per cent duties on all US steel and aluminium imports next month.
Yet the president’s decision not to implement tariffs right away could be seen as an opening bid for negotiation — following the same strategy he has already used to extract concessions from Mexico, Canada and Colombia — rather than a sign he’s committed to following through.
The president is hoping to have a discussion with other nations about how existing policies have created an unbalanced trade environment, the official said, and he is more than happy to lower tariffs if countries want to pare their levies or remove other trade barriers. – additional reporting Bloomberg
