Robert Besser
24 Mar 2025

DUBLIN, Ireland: Ireland's Finance Minister Paschal Donohoe has warned that an escalating trade war between the European Union and the United States could damage the Irish economy by increasing prices, slowing growth, and reducing job creation.

His comments followed the release of a joint analysis by the Department of Finance and the Economic and Social Research Institute (ESRI), which modeled the potential impact of tit-for-tat tariffs between the two trading blocs. The report found that even moderate tariffs could lead to a one percent to two percent drop in modified domestic demand over five years and a 2.5 percent to four percent hit to GDP.

"If we do end up in a position of a real, intense trade dispute developing between different parts of the world, it does mean the risk of prices going up, of fewer new jobs being created, and our economies growing slower," Donohoe told reporters. "The risks here could indeed affect the performance of our economy."

When asked if job losses in certain sectors were likely, he said that "could well be the case" but noted that the broader economy was resilient.

The analysis suggests that export-heavy sectors like technology and pharmaceuticals could see a decline of three percent to five percent below baseline projections. Employment growth would also be lower by two percent to three percent. However, the report did not account for potential shifts in foreign direct investment or the longer-term impact on public finances.

The Government considers proposed U.S. tariffs on European alcoholic beverages a "very serious issue," given the potential threat to Ireland's drinks industry. Tanaiste and Foreign Affairs Minister Simon Harris have been in talks with EU counterparts, urging a careful review of the bloc's countermeasures.

Donohoe said, "Unfortunately, because of the scale of trade dispute... it does mean that many different sectors in many different economies are going to be hurt, and we're trying to mitigate that hurt and avoid it happening."

He confirmed that Ireland had pushed for negotiations to avoid retaliatory tariffs and said clarity on the global economic outlook would be critical for budget planning.

"We have to be very clear... the keeping of jobs, the protecting of the competitiveness of our economy, will be our number one priority," he said.

Sinn Fein's Pearse Doherty echoed concerns: "The only way to win a trade war is not to be involved in the first instance."