Uncertainty over trade and economic policy has soared to highs not seen since the pandemic, the Government’s trade forum has been told.
A presentation to the group by Minister for Finance Paschal Donohoe underlined an “exceptionally uncertain” near-term outlook.
The forum, established earlier this year, comprises various members including Government and business and is aimed at facilitating engagement on new and emerging trade developments.
The Department of Finance is conducting assessments of the macroeconomic impact of tariffs along with the Economic and Social Research Institute (ESRI), focusing on the most likely landing zone.
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Officials believe that is a level of 10 per cent tariffs imposed unilaterally by the US on the rest of the world with carve outs for certain sectors. However, Mr Donohoe’s presentation to the trade forum struck a cautionary tone, noting that the carve outs are assumed “at least for now”.
It said uncertainty was the key factor shaping the economic outlook, with trade policy uncertainty at an all-time high and economic policy uncertainty greater than during the Covid-19 pandemic.
A weakened dollar is a headwind for some exporters, the forum was told, while oil prices have been volatile.
Mr Donohoe outlined that the economy and employment would continue to expand, albeit at a slower pace. In the short term, modified domestic demand – a measure of demand in the real economy – would grow by 2 per cent versus 2.5 per cent in a no-tariff scenario in 2025. The following year it would grow by 1.75 per cent, a point lower than the no-tariff scenario.
Employment, meanwhile, would grow at 1.75 per cent in 2025, versus 2 per cent without tariffs, and 1 per cent in 2026 rather than a predicted 1.5 per cent without tariffs.
Overall, it is estimated that employment would be 1.5 per cent lower over the medium term – equivalent to almost 50,000 fewer jobs compared with a no-tariff baseline. Employment will still rise overall, however.
The forum was cautioned that modelling the Irish economy was less reliable than elsewhere, due to the impact of specific firm’s decision on exports and GDP, and that the model does not take into account the impact on foreign direct investment as this concentrated sector is difficult to model.
The forum was warned that there was no clear precedent upon which confident projections could be made.
Government sources said its assessment was that the economy remained robust and would continue to grow, albeit at a slightly slower rate. More impact analysis will be presented on the day of Budget 2026, focusing on the potential hit to the public finances.
Tánaiste Simon Harris will be in Berlin on Friday for talks with his German counterpart, having recently engaged with his US counterpart Jameson Grier and EU trade ministers.
The Coalition intends to focus on bilateral engagements and trade missions such as Taoiseach Micheál Martin’s current Japan trip.
The forum also got an update on the Government’s upcoming action plan on market diversification, intended to help exporters tap new markets, due to go to Cabinet in July. A renewed focus is also expected on competitiveness.
It examined the semiconductor sector in Ireland, looking at current issues, and positioning Ireland as a global hub, which the Government says will be underpinned by a new national semiconductor strategy.
Minister for Public Expenditure Jack Chambers told the forum that the review of the National Development Plan will be finalised in July with a focus on investment in sectors such as water, energy and housing.
