The 20% tariff- impact on Irish people

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DeeKie

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What do you think about the 20% us tariff for Irish people? In particular what do you think it will do to personal savings, pensions and general wealth? Have you, will you make any adjustments?
 
DeeKie said:
In particular what do you think it will do to personal savings, pensions and general wealth?
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The likely outcome is that the US tariff policy in general (NB not the tariffs on imports from Ireland specifically) will lead to an immediate fall in equity markets, and lower future growth in equity markets than would otherwise be the case. As to how big a fall, and how much lower growth — that's hard to say. Apart from anything else, it depends on events which have yet to happen.

The impact of this on "personal savings, pensions and general wealth" will be negative. Savings wholly or partly invested in equities, directly or indirectly, will be the most affected.

As for the tariffs on Irish imports in particular — will there be an additional effect in Ireland? Yes, and it will be negative, but again it's hard to be precise.

The major Irish exports to the US are:
  • pharmaceuticals and chemicals (dwarfing everything else)
  • technical, medical, etc apparatus
  • machinery
  • electrical and electronic equipment
  • aircraft
  • food and drink products
Obviously, not all of these things are actually manufactured here. If, e.g. the massive Irish aviation leasing industry is adversely affected, that'll impact the relatively small number of people engaged in that industry, but the effect will be limited to them. But if food, drink or pharmaceutical exports to the US are reduced — yeah, that could potentially affect a lot of people, both those employed in the industry and the businesses that serve the industry and its workers.

But how exactly this will roll out is still uncertain. You might think that with a 20% tariff on pharmaceuticals, a lot of pharmaceutical production will relocate to places that suffer only the 10% tariff, or a zero tariff, or to the US itself. But that's not something that can happen quickly — pharmaceutical production facilities are both technically challenging and enormously expensive to construct; you don't relocate them on a whim. Trump being Trump, it's entirely possible that these tariffs will be varied again, or he will just call them off and claim a huge victory, or he'll do an about-face when the impact of the tariffs on the US cost of living means he's looking at the Republicans being whipped to a puree in the mid-term elections. Or whatever. The point is, the pharma business needs the dust to settle and some long-term stability to emerge before making major investment decisions. In the meantime they may just suck up the tariffs and the impact on sales. So it may be some time before we really know how this is going to pan out for Ireland.

It's also worth pointing out, as an additional complicating factor, that the tariffs only affect Irish exports to the US. Sticking with pharma again, we have pharma exports to the US of about US$32 billion. That looks like a lot, but we have total pharma exports of $92 billion. Even if pharma exports to the US were halved because of the tariffs — and I think that's probably a very high estimate — that means a fall in total pharma exports of US$16 billion, or 17.4%. High, no doubt, but it would still leave us as one of the largest pharma exporters in the world.
 
TomEdison said:
You might think that with a 20% tariff on pharmaceuticals, a lot of pharmaceutical production will relocate to places that suffer only the 10% tariff, or a zero tariff, or to the US itself
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I'd wonder if the American health insurance system will just jack up prices and continues as normal, just rejecting more claims and bankrupting more Americans.
 
I was just wondering has there ever been a time in Economic history when Tarriffs were deemed a successful policy, or is Trump aiming to create a new successful approach to International trade confounding all economic theory?
 
Fortune said:
I'd wonder if the American health insurance system will just jack up prices and continues as normal, just rejecting more claims and bankrupting more Americans.
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Putting up premium rates is what they would most like to do. Be a bit of both, I suspect, plus a bit of pharma companies accepting a bit of a squeeze on their margins (which are huge) — they can afford to do a bit of that to maintain their markets while they wait to see what the best long-term strategy is going to be.
Mayo1969 said:
I was just wondering has there ever been a time in Economic history when Tarriffs were deemed a successful policy, or is Trump aiming to create a new successful approach to International trade confounding all economic theory?
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The orthodox wisdom is that tariffs can, in some circumstances, be rational or beneficial. E.g.
  • For political rather than economic reasons. You want to sanction Russia for invading Ukraine; swingeing tariffs on imports from Russia can be a part of this. But note that this doesn't make you better off economically; there's an economic hit which you accept because it serves your political goals.
  • As a selective, targetted tool to put pressure on other countries to address unfair trade practices. Broadside tariffs like the ones Trump has just announced can't be used for this purpose.
  • For national security purposes, to maintain self-sufficiency in critical items. This only works, obviously, if self-sufficiency in this items is possible for you. And, again, it's economically disadvantageous, but you put up with the pain for non-economic reasons.
  • In an underdeveloped economy, to protect and foster domestic production and allow it to grown in size and efficiency to a point where it can compete on world markets. This obviously has no relevance to the US. And, even for countries where it is relevant, it's very hard to do well — the protected industries/sectors tend not to become as efficient as they might (they don't need to because they are protected from competition) and the political pressure for tariff protection to continue indefinitely is very strong.
I don't think Trump is aiming to confound all economic theory; he's just ignoring economic theory. I'm not aware of any rational economic case being made for Trump's tariffs, and they don't fit into any category of tariff that is recognised as being even potentially beneficial.
 
Mayo1969 said:
or is Trump aiming to create a new successful approach to International trade confounding all economic theory?
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The guy who falsely claims (like Mexico paying for the wall) that foreign governments will pay the tariffs that he has imposed and that these tariffs will raise trillions while also forcing manufacturing back to the USA (hint - it can't be both)? I doubt it...
 
In the short term, very little. Most Foreign companies have been quietly stockpiling in the US for the last few months. This also brings an element of certainty to things, at least now we know where we stand.

Longer term, it firstly all depends on how long this lasts and the impact it will have in perhaps 6 months time on US inflation.

Trump is a dealmaker and that is what he will want to do.
 
Peanuts20 said:
This also brings an element of certainty to things, at least now we know where we stand.
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But we don't because we don't know if/even the non auto tariffs take effect or if/when/how pharma and semiconductors will be hit. It's typical Trump chaos for the sake of it and for "ratings". But ... this too shall pass (eventually).
 
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The one thing I'm confident of about the goals of current US administration is that their actual goals are not as advertised. They're doing an excellent job of keeping their key desired outcomes opaque.

If you don't know what the person sitting opposite you actually cares about, it makes the negotiation process extremely difficult.

BUT you do know what you care about, so you can map out your own actions and responses to the actions of your partner/opponent.
  • Maybe the tariffs etc are aimed at a particular outcome, maybe they're just a sideshow and distraction from domestic actions. Maybe they're exactly what it says on the tin. The response to them is likely the same- reciprocal tariffs and a mix of tough talking and plamasing...
Fun times for everyone.
 
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