Trump’s Tariffs Threaten Irish Job Market

Ireland’s economic growth is projected to decelerate to 2 percent this year if a 10 percent tariff on US imports from the European Union remains in effect, or to 2.5 percent if the tariffs are removed, according to a forecast released by the Department of Finance on Tuesday.

The report also cautioned that up to 25,000 fewer jobs could be created in the Irish economy, with the labor market expanding at a slower pace than it would under a non-tariff scenario.

Ireland is particularly vulnerable to major policy shifts initiated by US President Donald Trump, given its heavy reliance on US multinationals for employment, tax revenue, and exports.

Prior to Trump's election, officials had forecast that modified domestic demand (MDD)—the department’s preferred economic indicator over GDP—would grow by 2.9 percent in both 2025 and 2026. In 2024, MDD grew by 2.7 percent.

However, the updated outlook now predicts that MDD growth will slow to 1.75 percent next year if tariffs persist, or increase by 2.8 percent if they are lifted. Due to heightened uncertainty, the forecast horizon has been adjusted to end in 2026.

Employment growth is also expected to decline, with projections suggesting a slowdown to 1.75 percent this year and approximately 1 percent next year if trade barriers remain in place.

As an EU member, Ireland faces tariffs of 10 percent on various exports, which could rise to 20 percent after a 90-day US suspension ends on July 8. While Brussels has paused countermeasures to allow for negotiations, significant progress has yet to be achieved.

Research co-authored by the Department of Finance in March highlighted the disproportionate impact of potential tariffs on Ireland, estimating that, if made permanent, they could reduce MDD by up to 1.8 percent by 2032.

Further risks loom from proposed US tariffs on pharmaceuticals and potential corporate tax reforms, both of which could impact Ireland’s thriving corporate tax revenue, a key driver of the country’s robust public finances.

Separately, data released on Tuesday indicated that concerns over future economic growth have driven Irish consumer sentiment down for the second consecutive month in April, reaching its lowest level in two years.