While Ireland appears vulnerable, particularly in relation to pharmaceuticals, aircraft would be an obvious way for the EU to hit back
Trade arrangements between the US and all other countries are likely to be torn up. The latest pronouncement from the incoming president promises that next year the US will unilaterally break the trade agreement between the US, Mexico and Canada, imposing tariffs on imports from both these neighbours., he has a track record of unpredictability. Thus things might turn out less disruptive than one may fear today, but it is best to be prepared.
Ireland is particularly vulnerable to tariffs on pharmaceutical exports, which would be designed to force the companies involved to switch to producing the relevant drugs in the US, at the very least for the US market. Because of the way drug companies specialise production lines, in quite a number of cases the world supply of particular drugs is produced in Ireland. For example, the world supply of Botox is manufactured in Westport.
If the EU opts to retaliate, one of the most effective tariffs it could impose would be on US exports of aircraft . Last year the US exported more than €33 billion worth of aircraft, of which €13 billion was to the EU. By contrast the EU, primarily Airbus, exported €43 billion of aircraft, only €5 billion of which went to the US. Given the balance of trade, the effect of a 20 per cent tariff on imports of aircraft would have a much bigger long-term effect on Boeing than Airbus.
Extensive economic research shows that imposing tariffs on a swathe of imports to the US will be bad for the US economy, and also bad for most of the rest of the world. The US itself would suffer more than other countries from the resulting rise in import prices, the disruption to supply chains and the losses from retaliatory higher-tariff barriers on US exports. Other countries will also be damaged. The outcome from such a trade war will be a lose-lose situation.
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