The US has introduced reciprocal tariffs, impacting global trade and raising tensions, especially with major trading partners such as the European Union. While President Donald Trump referred to April 2 as “Liberation Day,” European leaders have reacted strongly, with Manfred Weber, President of the European People’s Party (EPP), calling it “Resentment Day.” These tariffs will hit EU imports, including goods from Ireland, with rates potentially reaching 20% or more.
European Commission President Ursula von der Leyen described the tariffs as a severe blow to the global economy, warning of increased uncertainty and the rise of protectionism. The EU is preparing countermeasures, particularly in response to US tariffs on steel, which could escalate if negotiations fail. The EU’s response is expected to be methodical, focusing on leveraging existing trade agreements and exploring new markets to mitigate the impact of these tariffs.
Ireland’s economy, according to a Davy report by Chief Economist Kevin Timoney, is likely to face temporary slowdowns due to the uncertainty. However, Ireland has shown remarkable resilience in past challenges, such as Brexit, and is poised to adapt once again. Fiona Luciani, co-founder of the International Trade Institute, emphasized that Irish businesses must maintain a “non-panic approach” and stay agile in the face of evolving trade dynamics. She urged companies to examine their supply chains, understand who is responsible for tariffs, and explore cost-saving opportunities.
For Irish exporters, this uncertainty creates both challenges and potential opportunities. While it is unclear how tariff structures will evolve, the fundamental reasons why US companies trade with Irish and European firms remain intact. Luciani highlighted the importance of staying informed and engaging with local trade associations to navigate this complex situation effectively. As Irish businesses adapt, there may also be an opportunity to explore markets outside the US, especially in Asia, where demand for European goods could increase.
The EU, with its substantial economic weight, has the ability to organize a collective response to these tariffs. Mark Camilleri, President of the Canada EU Trade and Investment Association, suggested that the EU’s reliable and predictable trade system could serve as an attractive alternative to the increasingly unpredictable US stance. He noted that EU-Canada trade under the Comprehensive Economic and Trade Agreement (CETA) has already seen significant growth, and this relationship could strengthen further as the EU seeks to diversify its trade partners.
The EU’s focus on improving its competitiveness and addressing slow growth areas is already in motion, with initiatives such as the Competitiveness Compass. Germany, in particular, has increased spending on infrastructure, which could benefit the wider EU economy. Camilleri emphasized that the EU does not need to match the US in aggression but must align with ambition, particularly in fixing the single market and working with like-minded global partners.
Despite the negative impacts of the tariffs, there may be potential silver linings. Alan Holland, CEO of procurement technology firm Keelvar, noted that the shifting global trade environment could lead to more goods from Asia entering Europe, potentially lowering prices. However, this could pose challenges for local manufacturers competing with Asian producers. Additionally, Holland suggested that Europe could see growth in military goods, a sector traditionally underfunded in the region.
As international markets shift, the weakening of the US dollar could signal growing global interest in Europe and Asia as future leaders in commerce. If European universities attract top global talent, the EU could solidify its position as a hub for innovation, science, and high-growth industries, positioning itself as a formidable competitor in the global market.
