USA trumps EU in a bad deal for Ireland
It might be the biggest trade deal ever made but I don’t think we have much reason to be pleased. In fact, compared to where we were a year ago, it’s a very bad deal. While no trade war and less uncertainty are good, one-sided tariffs are bad news for trade.
A terrible deal for the EU and Ireland
US businesses can bring their goods and services into Europe without tariffs and most European businesses must pay a15 per cent tariff on goods they sell into the USA.
The ESRI has recently warned that 45,000 jobs could be at risk in a scenario where 10 per cent tariffs persisted. Now it is going to be at least 15 per cent tariffs, what is the potential increase in the number of job losses?
Another potentially major issue unique to Ireland arises because goods from the UK entering the US will have a smaller tariff rate of 10 per cent on most goods, as British Prime Minister Starmer did a better deal with the USA back in May.
The agreement includes goods being exported from Northern Ireland. How badly will this economic advantage damage exporters of similar goods from the Republic of Ireland?
There remains major uncertainty over the pharmaceutical and semiconductor tariff levels after Trump ordered US Government investigations into both those industries. It appears that the USA has not yet agreed to a nailed-down 15 per cent tariff level for these two key export sectors, which is very worrying for Irish jobs and tax revenues.
A positive spin
All the Irish Government ministers from the Taoiseach down and our Irish EU Commissioner are all, as you would expect, lauding this framework as a win. That is naturally the line taken by EU Commissioner, Ursula von der Leyen. ‘It brings certainty,’ is the great phrase that should leave us all relieved. It might work with economists and is partially true for some industries and businesses, but in reality we certainly ended up with a poor deal.
Indeed when we see the full details, it could turn out to be much worse. We will know that after the draft agreement is published later this week, and all the political ‘win’ claims have supposedly conditioned us all.
Between the EU and the US markets, we are 800 million people, which accounts for circa 44 per cent of global GDP, but we appear to have allowed President Trump to bully us into the deal he wanted. Europe was afraid of a trade war with the USA and even though the Americans were similarly very concerned about a major trade conflict with Europe, Trump did not blink first.
Of course, he also had the cloud hanging over Europe, that we need the USA to defend us (maybe?) from Russia and any other aggressors.
I’m starting to begrudgingly admire Trump’s economic bargaining skills and I’m not surprised that he saw the weaknesses in the EU governance structures. Our side lacks the ability to be strong and not be burdened with bureaucracy by having to bring all the EU administrative structures and countries along. The Trump regime negotiates as one, not having to refer back to their 50 state governors for a nod of approval. That is negotiating strength!
Germany still calling the EU economic shots
In Germany, the deal is welcomed more genuinely because it takes the current 27.5 per cent tariff on their massive automotive industry products down to 15 per cent.
Let us hope for Ireland’s sake, that the power that Germany wields in the EU block will mean the pharmaceutical and semiconductor tariffs (big industries in Germany too) won’t get any worse after the Trump ordered USA government reviews are completed and reports back to them in the next two weeks.
The cherry on top for President Trump, as part of the deal, is that the EU has pledged to buy US military equipment, which we need. But European companies are also to invest $600 billion in the US, while President Trump is still in office.
This framework agreement between the USA and the EU is not a good deal for Ireland or the EU. The only positives are that a tit-for-tat trade war will be avoided and some level of uncertainty will be removed for businesses. It is akin to a battered boxer being taken to hospital after the towel is thrown in the ring. Thankfully life-support isn’t required and after a long recovery, he is advised not to enter the ring again!
ACEA welcome deal in principle with reservations
In a statement, the European Automobile Manufacturers Association (ACEA) said it “supports de-escalation”.
Director General Sigrid de Vries said: “The agreement takes an important step towards easing the intense uncertainty surrounding transatlantic trade relations in recent months, and ACEA welcomes this development in principle.
“Nevertheless, the US will retain higher tariffs on automobiles and automotive parts, and this will continue to have a negative impact not just for industry in the EU but also in the US.”
Best European leader quotes about the deal
French Prime Minister, François Bayrou:
“It is a sombre day when an alliance of free peoples, brought together to affirm their common values and to defend their common interests, resigns itself to submission.”
Hungarian Prime Minister, Viktor Orbán:
“This is not an agreement … Donald Trump ate (Ursula) von der Leyen for breakfast, this is what happened and we suspected this would happen as the US president is a heavyweight when it comes to negotiations while Madame President is featherweight.”