Most of the focus on the possible damage of the Trump administration to Ireland has focused on the manufacturing side of the economy. Particularly, this concerns the massive pharma exports from Ireland to the US and the potential impact of tariffs on these.
The services sector will also come into the frame, however –particularly the big tech service companies with their European bases in Ireland. Here there are two key issues – tax and regulation.
With the deal as part of the OECD global tax agreement on the taxation of these companies now effectively dead, there is scope for tensions here between the US and EU. In particular, Trump is likely to target so-called digital services taxes which are threatened in many bigger EU countries where these companies have big sales but not significant operations, and thus currently pay little tax.
But the more potent issue may be regulation and objections by Donald Trump – and his big tech supports such as Elon Musk and Mark Zuckerberg – to the way their companies are regulated in the EU.
As the European home for many of these countries, Ireland and Irish regulators have a significant role here. Trouble could lie ahead. In a US Senate nomination hearing this week, Jamieson Greer, Trump’s nominee as US trade representative, made strong comments on the issue. He said decisions on how to regulate social media companies should be a matter for the US. The US should not be “outsourcing our regulation”, he said, “to the EU or elsewhere”, and “they can’t discriminate against us and it won’t be tolerated”.
Are we at the beginning of Donald Trump’s global trade war?
With the Financial Times reporting this week that one of the measures the European Commission was considering in terms of retaliating to Trump was to hit the business of social media giants in the European market, there is a risk of escalation. This is one to watch.
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