The Government is expected to make a renewed push for certain key sectors to be exempted from the impact of new US trade policies amid growing expectations within Cabinet that a baseline 10 per cent tariffs could remain even if a deal is reached between the European Union and the Trump administration in Washington.
US president Donald Trump has threatened to impose 50 per cent tariffs on all EU goods from July 9th unless the two sides reach a deal. Most EU goods already face a 10 per cent tariff, with levies of 25 per cent on cars and car parts and 50 per cent on steel and aluminium.
Talks between the EU and US are continuing, but senior figures in Dublin are increasingly concerned that even if an agreement is reached, Washington will insist that a baseline of 10 per cent tariffs remain in place.
Tánaiste and Minister for Foreign Affairs and Trade Simon Harris told an Oireachtas committee last week that such a development would “not be without very significant challenges for certain sectors of the Irish economy”.
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He said that looking at framework agreements put in place between Washington and other countries, “10 per cent is the new norm in terms of tariffs from a US perspective”.
Mr Harris told The Irish Times on Sunday night that “Ireland’s position remained “focused on the negotiations and on pursuing positive dialogue and a mutually beneficial outcome with certainty for businesses on both sides of the Atlantic”.
“This position has been continually communicated to both the EU, the US and to other international and business partners.
“As the prospect of a deal comes into view, it will have to be assessed against what exclusions from a baseline 10 per cent tariff can be secured, including scope for ‘zero for zero’ arrangements for key sectors, as well as clarity on the outcome of the section 232 investigations (which assess the impact of imports on US national security), including on pharmaceuticals, semiconductors and aviation.”
The Tánaiste will travel to Berlin on Friday, July 4th, to meet his German counterpart.
Mr Harris will also provide an update to the Government’s trade forum which is to meet on Wednesday – a week before the Trump deadline for a deal.
The forum will be given a new analysis on the potential impact of tariffs on the Irish economy and will also hear details on a new national strategy for the semiconductor sector.
The Government is, in particular, concerned at the potential impact of tariffs on the pharmaceutical industry, in which about 90 companies employ almost 50,000 staff. About 30,000 of those workers are employed by US companies.
However, within Government there are also worries at the impact of non-tariff initiatives by the Trump administration aimed at driving the domestic production of pharmaceuticals in the United States.
Internal briefing notes drawn up for Mr Harris show that officials believe an executive order signed by the US president last month represents a “clear policy shift” from Washington to favour US manufacturing facilities.
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The executive order – Regulatory Relief to Promote Domestic Production of Critical Medicines – was signed by Mr Trump on May 5th.
It raises concerns about the length of time it takes to build pharmaceutical manufacturing facilities in the US – something that Irish sources have outlined may limit the effectiveness of the US administration’s moves to reduce its pharmaceutical imports from drug-producing nations such as Ireland.
The order seeks to cut red tape for US drugmakers and enhance inspection of foreign manufacturing facilities, which would be funded by increased fees levied on them.
The analysis for the Tánaiste outlines that the move is a “clear policy shift towards prioritising US manufacturing facilities over foreign ones”.
“The direction to increase fees for and inspections of foreign manufacturing plants is likely to increase costs and potentially create delays or hurdles for non-US based producers,” the officials wrote.
