IDA chief executive Michael Lohan has warned that significant US tariffs on Ireland’s multi-billion-euro pharma trade would be “disruptive”.
However, he mooted the idea that because the bulk of the exports were intermediate products they might escape tariffs.
Mr Lohan was speaking at the launch of agency’s latest five-year plan and in the wake of US president Donald Trump’s latest threat to impose 25 per cent tariffs on automobile, semiconductor and pharmaceutical imports.
Pharmaceuticals make up the bulk of Ireland’s €73 billion export trade with the US.
“The vast majority of the product that leaves Ireland is actually not finished product, it is intermediate product which is brought to the US for further processing and further value add,” Mr Lohan said.
Currently it is not clear if the proposed tariffs would apply at the point of sale or at the point of transfer as it goes through the supply chain, he said.
Under World Trade Organisation (WTO) rules, intermediate goods are not subject to tariffs and “one would hope that will continue,” Mr Lohan said.
However he warned that significant tariffs irrespective of what sector they are in would be “disruptive” from a trade perspective and could prove inflationary for consumers.
Ireland’s giant pharma sector and the big trade surplus it generates with the US is now firmly in the cross-hairs of the new Washington administration.
Mr Trump told reporters on Tuesday night that sectoral tariffs on pharmaceuticals and semiconductor chips would start at “25 per cent or higher” and that a further update would be delivered on April 2nd.
Highlighting the rise in trade protectionism and the increasingly competitive space for investment, Mr Lohan said Ireland could only focus on what it could control which he said were “the key enabling conditions” for investment.
Minister for Enterprise Peter Burke said the Government would use the forthcoming St Patrick’s Day events in Washington to highlight Ireland’s increasing importance to the US economy.
Ireland is currently the seventh largest foreign investor in the US with over 118,000 people employed by 650 companies.
The IDA’s latest five-year strategy would focus “on winning, strengthening and maintaining long term investment with existing and new client base,” the agency said.
The strategy targets 1,000 investments, including €7 billion of research, development and innovation (RD&I) investment, across what it described as the “priority sectors of growth and opportunity”.
These include digitalisation and AI (artificial intelligence); semiconductors; health; and sustainability.
If achieved, the investments would create 75,000 new jobs.
“Our new strategy is designed to keep the FDI pipeline strong but also to recognise the importance of holding on to what we have,” IDA chairman Feargal O’Rourke said.
“FDI companies in Ireland tell us of their need to constantly show relevance back at corporate HQ whether it is upskilling their employees with digital and AI skills, having a sustainable operation, or maximising their effectiveness and efficiency,” he said.
The IDA’s strategy, which is aligned with the Programme for Government and the White Paper on Enterprise, sets out IDA Ireland’s ambition for continued growth through four key strategic objectives: strengthen long term investment; scale cutting-edge innovation; drive sustainable change; and maximise regional opportunities.
