The decision by US president Donald Trump to push ahead and impose tariffs on Mexico, Canada and China is misguided and dangerous. With the threat of wider tariffs in prospect – including on the EU – Trump may be firing the first shots in a global trade war from which there would be no winners.
Trump’s actions are driven by a misguided economic philosophy and risk serious damage to his own economy and his country’s reputation, as well as the international trading system. Politically, it is founded on the dissatisfaction of many who feel – with some justification – that they have not felt the benefits of economic growth. Rather than being the answer to this, however, it threatens to make things worse.
Trump may not care. His political philosophy is based on disruption and chaos. Both will now follow if these tariffs are maintained for any period. Canada has already announced its response and Mexico and China will follow. A trade war in North America is already underway.
This will bring significant disruption and short-term costs, which Trump argues is a price worth paying. If left in place , the tariffs will push up US inflation and hit consumers and businesses. The view of the financial markets is awaited; but any feeling that Trump would take it easy on implementing tariffs has been washed away and businesses are already objecting.
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Trump’s ostensible reason to impose these tariffs is to demand changes to cut immigration and illegal drug imports into the US. More likely, he is setting down a marker and trying to win some political advantage by looking tough. It is a hugely risky and misjudged manoeuvre.
Trump has also threatened to follow up with similar moves against the EU and other countries which he feels have treated the US unfairly.
This carries dangers for Ireland, which is a significant exporter to the US. By far the biggest contributor to this are pharma and chemical exports from US companies based here back to the American market. The Irish jobs and tax revenue this has created has already been commented on by senior figures in the Trump administration.
Ireland needs to recognise this threat and take it seriously. The State has made huge gains in attracting foreign direct investment in recent years and these are now at risk, while Ireland is also vulnerable to a wider trade war.
As well as the obvious need for diplomatic action in Washington and Brussels, the Government must find ways to accelerate the vital investments in housing, energy, water and other infrastructure where delay is already hurting economic prospects, as well as having a significant social cost.
As the political parties spend hours discussing Dáil speaking rights, bigger issues with a real impact on Ireland’s future need to be tackled.
