Firms impacted by US tariffs will begin cutting hours for workers as soon as this weekend, the head of the country’s largest business lobby group has said.
Speaking after a meeting of the Government’s trade forum on Friday, Ibec chief executive Danny McCoy predicted firms in the fast-moving consumer goods sector would see rapid drops in demand and that some of their employees would have to be put on a short-time working basis.
The Ibec chief executive reiterated his group’s call for time-bound supports for firms impacted by the crisis.
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“We were talking about time bound [supports]. It’s not to put things permanently in place, because in this new world order we will have to change. But there is immediacy for firms this weekend, who will know that their demand is likely to drop quite substantially and their workers will need to go on short time working.”
“Our experiences from both Covid and Brexit was it’s much better to have people remain connected to their employer till this moment passes,” he said.
“Tariffs are coming in in the next couple of days,” he said. “The demand for the products that people are selling will be immediate when they’re fast-moving consumer goods, like our drinks industry, for instance.”
Asked if his member firms had issued direct warnings of this, he said that “would be too strong a word, it’s just the reality of the market. If your demand is likely to dry up, you have an excess supply of both product and workers.”
Meanwhile, it’s understood that planning is underway for Tánaiste and Minister for Trade Simon Harris to travel to Washington to meet US Secretary of Commerce Howard Lutnik next week.
Asked about Mr McCoy’s comments after the meeting, Mr Harris said the Ibec boss was “perhaps braver than I am” in making such predictions.
“We have to watch this on a very regular basis,” he said, describing that the economy was facing a “moment of great volatility”. Mr Harris said there was already a short-term employment scheme in palace to ensure people could access supports if they were put on reduced hours. He said the Government “stands ready” to assist businesses and support workers.
Government grapples with tariff fallout
But he added: “There isn’t any scheme the benefit of which would outweigh the progress that we could make in terms of getting to a better place with tariffs in the days and weeks ahead, and that’s what our focus as a Government should rightly be on.”
Asked about the response of the European Union to the US tariffs, and the potential use of the bloc’s Anti-Coercion Instrument – characterised as a “nuclear weapon” in a trade war, allowing wide-ranging limits on a country’s trading relationship with Brussels – Mr Harris said he didn’t believe it was the majority view of member states or the European Commission that it should be deployed.
Mr Harris suggested it was part of a negotiating strategy to discuss potential mechanisms to target the US, but that his interactions with counterparts and the European Commission indicated that the “overwhelming view” was for a graduated response, engagement, and to seek to de-escalate the situation.
He reiterated that he expected tariff measures on the pharmaceutical sector to follow, but that their absence for the current period had lessened in the immediate term the impact of the Trump tariffs to date.
Mr Harris said there was “unanimity” among the forum members regarding the importance of European unity, and the importance of the EU being “calm, measured in our responses” and with interventions aimed at bringing the US around the negotiating table.
He said that despite three occasions on which the EU has been “provoked” by the US – with tariffs on steel and aluminium, on automobiles, and during Wednesday’s announcements by President Donald Trump – it had not reacted in anger or sought to escalate.
He said a call between Howard Lutnick, the US commerce secretary and EU trade commissioner Maros Sefcovic on Friday would be an “important moment”. Ahead of a meeting of EU trade ministers on Monday, Mr Harris said the “risk of a spiral of escalation” was there and “we should all seek to avoid that”.
He said the EU approach would be to remove trade barriers, adding that Mr Trump has signalled a willingness to negotiate. While Ireland would negotiate through the EU, he said the Government would continue to talk bilaterally to the US administration as well. He outlined that there was a “fundamental shift in the global trading environment” under way, characterised by rapid and volatile developments.
The Tánaiste said putting tariffs on goods would drive up costs for US consumers. “When you run in an election and you promise people you’re going to reduce the cost of living, I’m not sure how you square that circle.”
