The Taoiseach Micheál Martin has probably had all the unsolicited advice he wants or needs about what he should and should not say to Donald Trump when he meets the US president in the oval office on Wednesday.
The low bar for what constitutes a successful meeting set by the public humiliation of the Ukrainian president Volodymyr Zelenskiy by Trump and his vice-president JD Vance in the same venue two weeks ago means that the pressure is off.
The presumption is that Martin will get a bit of stick about Ireland’s trade surplus in goods with the US, which has been flagged a couple of times by members of his administration, notably the Wall Street billionaire commerce secretary Howard Lutnick.
The size of our trade surplus in goods with the US is indeed something to behold. At €72.6 billion in 2024 it was the fourth largest with any single country, although several orders of magnitude less that the surplus in goods run by China and the EU as a whole. Eurostat figures on Tuesday put the EU’s trade surplus in goods with the US at just under €200 billion last year.
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This surplus relates to physical goods. Many have also noted that the surplus in physical goods is more than counterbalanced by a deficit in services. We import $163 billion (€149 billion) worth of US services, resulting in a double-digit trade deficit overall.
Whether Martin should bother trying to explain this in the White House is debatable. He might be better to just let the president extemporise about imposing tariffs on Ireland and whatever else takes his fancy. Tickle his tummy.
The on-again, off-again nature of Trump’s tariff threats means that less than two months into his presidency they are something of a devalued currency. But for as long as they are front of mind and preventing a more thoughtful approach being adopted to the Irish trade surplus, then they are to be welcomed in all their madness.
Even by his own standards Trump’s claim that the EU was established with the express goal of ripping off America is a tendentious one. But he is not entirely wrong in asserting that the United States is being taken advantage of as far as the Irish trade surplus goes. The culprits – in the case of Ireland – are US multinationals.
Much of our trade surplus stems from US-owned companies based here supplying chemicals, drugs and medical devices to their domestic market. If a robbery has been committed, Ireland is at best a willing accomplice and at worst the getaway driver.
What would be truly worrying would be a concerted effort by the Trump administration to woo these US companies back home in the way semiconductor manufacturers have been incentivised to manufacture in the US.
Anyone in the Trump administration who stopped to consider the issue would quickly see that of the myriad reasons why US companies find it makes sense to supply the US market from Ireland, only one of them is not in their power to reverse.
It is Ireland’s membership of the European Union. Access to the European single market makes it possible for US companies to operate in Ireland at a scale that in turn makes shipping drugs and stents back to the US profitable.
The question is whether the other factors in the equation can cancel this out.
Money is clearly not a problem. The Biden administration found $280 billion for the 2022 Chips Act to support the reshoring of semiconductor design and manufacturing. Much of it in the form of direct subsidies. It seems to have worked, with Intel pulling back from European expansion and investing in new plants in the US.
Something similar for the pharmaceutical industry is clearly possible. Although Trump’s description of the Chips Act – in his state of the union address as a “horrible, horrible thing” does not augur well for such an initiative.
Taxation is probably a bit more complicated because of the risk of unintended consequences if the US tax laws are changed to make it less attractive, in terms of their global tax base, for US drug companies to have significant manufacturing operations in Ireland.
Again, the Trump administration’s effort to blow up the OECD base erosion and profit shifting (Beps) agreement – the president pulled the US out of Beps via an executive order issued on the day of his inauguration – is a step in the wrong direction.
The other main plank of Ireland’s “offer” to US drug companies is also equally replicable. Creating the sort of skilled workforce that makes Ireland attractive is simply a matter of investment in education and smart migration policies. The initial moves made by the new administration also seem to be pulling in the opposite direction with the clamp down on H-1B visas.
It its axiomatic that if the Trump administration makes it easier and cheaper for US companies to make drugs and medical devices for the American market in the US market they will do so. The longer the Trump administration flounders around trying to do the opposite – make it expensive to manufacture abroad via import tariffs – the better for Ireland.
