Ireland’s economic model is set to come under unprecedented scrutiny after the Trump administration launched an investigation into its trade relations with “partners” around the world.
New data shows that Ireland currently has the most favourable trade with the US of any country in Europe bar Germany.
It should be good news, showing we export far more to the US than we buy there.
But, US authorities have named Ireland as one of the countries it claims are guilty of running “chronic” trade surpluses with the US.
President Donald Trump’s protectionist rhetoric has led to widespread concern that trade barriers will be used to slow trade.
The multinational sector in Ireland, dominated by US firms, faces particular uncertainty.
Government sources have told this newspaper that some US companies have shelved Irish investment plans altogether until Mr Trump’s plans become more clear.
“The fact that we already down this route with the Trump administration less than three months into the presidency shows they are serious about this,” said Alan McQuaid, chief economist with Merrion Capital, who believes that the latest pronouncement from the US administration is a worrying development for this country.
Ireland had a trade surplus with the US of $36bn (€33.7bn) last year, enough to be listed alongside China ($347bn), Japan ($69bn), Germany ($65bn) and Mexico ($63bn) as countries the US has accused of running what it says are “unfair” deficits.
Data from the United States Census Bureau shows that Ireland was responsible for over a fifth of the EU’s trade surplus with the US.
The data show that the EU ran a total trade surplus of $165bn (€154bn) with the US last year.The US exported goods and services worth $247bn (€231bn) to the European Union last year. EU exports to the US were $362bn (€339bn), roughly a fifth of all exports from the bloc.
The trade imbalance is more pronounced in the case of Ireland.
Indeed, of all EU countries, only Malta (27pc) sends a higher proportion of exports to the US than Ireland, but the numbers involved there are tiny.
“It looks like we are going to be in the eye of the storm on the trade issue, on corporation tax and obviously there’s Brexit,” Alan McQuaid said.
Germany(9pc) and the UK (15pc) also count the US as their largest export market.
While the Germans have been the target of the US administration’s new investigation, trade relations with the UK will be smoother given that the US ran a trade deficit of $1bn with the country over the course of 2016.
Belgium ($15.2bn), The Netherlands ($24.2bn), Luxembourg ($949m) and Cyprus ($132m) are the only other EU countries that had a trade deficit with the US last year.
Other countries with large surpluses with the US include in Italy ($28.4bn),France ($15.8bn), Denmark ($5.7bn), Sweden ($5.9bn), Austria($7bn) and Spain($3bn).
Undoubtedly the most pressing issue for global trade presently is the discussions between Mr Trump and Chinese president Xi Jinping, scheduled for later this week.
The two differ in almost every respect, from their political styles to their diplomatic experience, adding uncertainty to what has been called the world’s most important bilateral relationship. (Additional reporting Reuters)
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