When the European Union applied retaliatory tariffs to certain US products during President Donald Trump’s first term it led to a 62 per cent reduction in imports of those products in Ireland, new research has disclosed.
A paper by the Parliamentary Budget Office (PBO) examining trade between Ireland and the US said that tariffs on steel and aluminium introduced by Mr Trump in March 2018 led to a clear reduction in exports from the EU to the US. But it has also found that once the EU applied retaliatory tariffs to a list of US products there was a significant reduction in the imports of those products from the US to the EU, and an even bigger reduction to Ireland.
The PBO provides independent economic and budgetary advice to the Oireachtas, and its latest research is looking at the possible impact of a trade war on the EU, and Irish, economies.
In March 2019 tariffs of 25 per cent on steel and 10 per cent on aluminium were imposed by the US on imports from the EU. The tariffs remained in place until January 2022, a period of three years and nine months. The paper explores the impact it had on the European steel and aluminium industries.
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“During the period the average monthly value of steel exports to the US was 19 per cent lower,” it said. “Following the removal of tariffs in January 2022, steel exports (were) 59 per cent higher than during the tariff period.”
The impact on aluminium exports was less dramatic because of the lower 10 per cent tariff. In fact exports actually increased by 25 per cent during the tariff period.
Because Ireland is a relatively small exporter of steel and aluminium the tariffs had a close to negligible impact here. Steel exports fell by only 1 per cent, while aluminium exports fell by 3 per cent.
In June 2018 the EU introduced retaliatory tariffs on the US which targeted products such as food, beverages, tobacco, steel, aluminium, motorcycles, sea vessels and playing cards. The average monthly imports of those products to the EU fell by 38 per cent during the tariff period, and then increased by 23 per cent when the tariffs were lifted.
The PBO paper has found that the impact in Ireland of tariffed imports was more marked. Average monthly imports decreased by 62 per cent during the period, and then more than doubled after the tariffs were lifted.
A note of caution is expressed that some of the period covered the Covid pandemic restrictions.
In its assessment of the current situation the PBO concludes that the situation remains “highly volatile. with significant implications for Ireland’s trade dynamics”.
It continued: “Ireland is highly exposed to future potential tariffs on pharmaceuticals...Historical data shows that increases in tariffs such as those on steel and aluminium in 2018 have led to lower trade in affected products.”
