As Donald Trump’s tariff-spree turns its sights towards the Irish state, Klavs Ciprikis assesses the exposure to American multinationals and discusses the urgent need for an alternative economic model.
Watching our Taoiseach bend a knee to Donald Trump in the White House during our St Patrick’s Day celebrations exposed our submissiveness to the imperialist state of America. Trump’s accusations of the Irish state stealing American business and jobs were met with silence, smiles, and polite nods from the Taoiseach. After they both enjoyed a good laugh about the housing crisis, Trump continued his threats to the people of Ireland while Micheál Martin sat obediently in full support of Trump’s ramblings, because any disturbance of American business in Ireland would be bad for the Irish economy.
Over the last decade, Ireland’s economic success is attributed to its ability to attract funding from abroad, also known as Foreign Direct Investment, and incentivising large corporations to conduct business in Ireland. This has been achieved through years of business-friendly taxation and legislative measures aimed at improving efficiency, productivity, openness to trade and investment from abroad. The Irish government has been perfectly happy to receive international praise about economic figures like growth in GDP, FDI, employment and trade while exposing key industries and natural resources to the influence and whims of the market, which is dominated by US corporations.
American companies from biopharma, technology and financial services sectors have been particularly active in taking advantage of Ireland’s corporate welfare. There are about 970 American firms operating in Ireland, directly employing 200,000 people or 7% of total employment, and contributing €15.5 billion or 55% of all corporate tax revenues. As a result, Ireland’s economy, and capacity to fund its social investments is significantly exposed to US multinationals, and hence, US government policy.
We are reminded about our reliance on US megacorporations by our government, which continuously expresses admiration for multinational operations in Ireland. When the government is questioned and criticised about this overexposure it becomes apparent that they do not have contingency plans if multinationals decide to leave. Furthermore, the government has done very little to regulate for overexposure to multinationals and investments from non-EU countries like the US, all the while incentivising the same multinationals to come here by increasing funding for state agencies responsible for attracting investments from abroad.
Socialists in Ireland have long pointed out the inherent instability of this economic model as promoted by the Irish establishment. Given the volatile geopolitical environment in the US, it is becoming increasingly important to plan for negative shocks to the Irish economy and society – and to point to a real alternative.
Trump Effect on the Irish Economy
In a convoluted way, Donald Trump thinks that he can bring American funding back home by introducing a series of trade tariffs on its closest trading partners. Trump has introduced tariffs on all imports from China and he is planning further tariffs on Mexico, Canada, and the EU. In theory, tariffs should make imports more expensive for American people, because a profit-driven business importing goods will pass on the tariff charge to the end consumer, which should incentivise citizens to bypass more expensive foreign goods and instead go for cheaper all-American alternatives. There are a lot of things that could happen due to Trump taxes, but one thing is certain, the end consumer, a citizen, nationally and internationally will be worse off as prices increase, incomes remain stagnant, and governments refuse to exert control over prices of products.
Given that Ireland exported about 34% of total exports or €73 billion worth of goods to the US in 2024, American tariffs on these goods pose a significant risk to Irish jobs and public resources. About 80% of total exports to America came from the medical and pharmaceutical sector, which will be the main Irish sector negatively affected by Trump tariffs. It is unclear to what extent the Irish government is prepared to deal with economic shocks due to ‘Trump taxes’. From Micheál Martin’s recent visit to the White House, it appears that Fianna Fáil and Fine Gael are more interested in appealing to Donald Trump and reassuring him that we mean no harm rather than condemning his actions and making genuine efforts to move away from a situation where Irish resources are at the mercy of US corporations and US government policy.
For most other sectors where tariffs do not apply, like financial and technology related services, Trump has other plans to incentivise businesses to return home. Most US multinationals have established headquarters in Ireland to move their intellectual property here for the sole purpose of lowering the taxes they have to pay. In Ireland, copyright and patents are classified as intellectual property and any profits from the sale of intellectual property are subject to a relatively low headline corporation tax rate of 12.5%. What these companies end up paying can often be much lower.
Coupled with incentivising megacorporations to bring intellectual property to Ireland and supplementary tax breaks, Ireland has been able to attract businesses like Google, Amazon, KPMG, Pfizer and PayPal. Trump has indicated that he wants to restructure the corporate tax regime in the US to encourage US multinationals and foreign investors to bring their funds back to America. Trump has been vague about how he plans to bring foreign investment to America, but nevertheless, Ireland’s reliance on US multinationals for employment opportunities and taxation revenues means that there needs to be a contingency plan if large corporations decide to leave.
Employment Outcomes
In case US companies decide to leave, it is important to understand what may happen to the 200,000 people directly employed by US businesses. We know that Trump tariffs on EU goods, as well as lower corporate tax rate in the US, and other incentives aimed at returning funds back to the US will negatively affect the Irish economy. The lack of housing, skilled personnel, and electrical infrastructure in Ireland may also drive away megacorporations. In the worst-case scenario, all 970 US companies decide to leave Ireland, leaving 200,000 workers unemployed and a massive hole in tax revenues.
However, many multinationals, especially pharmaceutical companies, have decade-long large-scale investments in Ireland that they would be reluctant to leave behind. A highly educated and skilled workforce is also attractive for multinationals, as well as English being the primary language. It is also likely that Trump’s tariffs on US multinationals in Ireland could increase the supply of products to non-US countries, which could offset the effects of his plan to reshore production to the US. In terms of services, most trade is with non-US markets. Therefore, it may not be necessary for multinationals to relocate to the US and continue their operations in Ireland.
Alternative Industrial Strategy
To reduce the risks of overreliance on funding from abroad and multinationals, and to become more self-sustaining, the Irish state will have to intervene. The government could use legislative powers and State savings to renationalise natural resources, establish state-owned enterprises, and empower workers. There are currently €25.2 billion in savings that can be used to develop an economy that is fair, considerate, and efficient.
The government should spend its €25.2 billion in savings to create genuine not-for-profit organisations that are managed by workers in key industries, such as renewable energy, agri-foods, pharmaceuticals, and financial services, to produce high-quality products at competitive prices. By removing the profit-maximisation motive of state-owned and worker-managed enterprises, we could sell high-quality goods and services at lower prices and squeeze out profit-driven, anti-worker, and environmentally destructive enterprises.
There are multiple industries in which Ireland is exceptionally strong. The state should invest in renewable energy such as wind, solar, tidal and all other sources of renewable energy to be developed in the public interest. The state’s approach to agrifoods should be to empower and support local farmers, suppliers of inputs, and retailers. In the pharmaceutical and medical industry, a state-owned, and worker-controlled company could produce drugs, such as antibiotics, paracetamol, antiviral medication, and medical devices, such as heart pumping devices, inhalers, blood clot traps, that could be sold below the cost of branded alternatives. As a step towards a fully state-owned banking system, a state-led banking company can be established to serve in the interests of the people, co-operatives, and small enterprises and not profit-driven shareholders.
Previous examples present a few real options for the Irish state to spend some of its savings to take back control of resources and give workers a genuine say in how their workplace is managed. By regulating existing sectors and undercutting profit-maximising multinationals, we can develop an economy and society that is efficient, fair, and self-sustaining. There will be political struggles to overcome the interests of Irish profiteers and megacorporations, but ultimately working class people in large enough numbers, armed with an alternative vision, will have to lead the charge for any real change to the status quo.
While this piece has not looked at the economic dynamics north of the border, it is significant that despite the role of the British state, Stormont politicians are as enthusiastic in chasing after US multinationals as their counterparts south of the border.
Ultimately, people should not accept that the control of our natural resources should be in the hands of a few private foreign billionaires and corporations. We can start by demanding that our representatives take real steps to invest in key industries in our economy, nationalise essential businesses, and work in the interests of the people and not US billionaires.
