Donald Trump has been re-elected - What does his win mean for Ireland?

Republican candidate Donald Trump has clinched victory in the hotly-contested US Presidential election race, and the effects on Ireland are soon to be laid bare. 

Senior government figures nationwide have rushed to congratulate the incumbent President Trump, with Taoiseach Simon Harris and Tánaiste Micheál Martin pledging to work to maintain and strengthen the historic links between Ireland and the US.

"Ireland and the United States have deep and historical bonds of people, and we will work to make these even stronger in the years ahead," Taoiseach Simon Harris said in a statement.

"The world faces many challenges and needs leadership to meet them. With the US and Ireland's shared commitment to democracy and international law, we can, and will, tackle these challenges."

Despite his mention of "historical bonds" and "shared commitment", this result is expected to have major implications on a number of sectors of Irish life.

ECONOMY

With an “America First” first approach, Donald Trump is set to implement major changes to corporation taxes and tariffs once in office.

Ireland has greatly benefited from global profit shifting. International tax policies have encouraged many U.S. multinationals to route their profits through Ireland, allowing Ireland to claim a share of those earnings.

This shift has fueled a boom in corporate tax revenue. In 2014, Ireland collected just under €5 billion in corporate taxes, which surged to nearly €24 billion by 2023.

This dramatic increase has made corporate tax revenues far more crucial to Ireland’s financial stability.

Most of this revenue comes from U.S. multinationals, incentivized by the Irish government. Tax breaks encouraged many U.S. companies to relocate their intellectual property (IP) to Ireland.

As a result, a larger share of their profits ended up in Ireland, leading to higher tax collections.

While this has been highly beneficial for Ireland, it has sparked discontent in the U.S.

In essence, many in the U.S. view these profits as money that should stay within American borders, not go to Ireland.

There’s speculation that Trump may attempt to revise U.S. tax laws to incentivize American companies to bring their IPs back to the U.S.

Such changes could sharply reduce the amount of profit flowing through Ireland, resulting in a significant drop in corporate tax revenue.

How substantial could this impact be?

According to a study published by Ireland’s Department of Finance earlier this year, half of Ireland’s 2023 corporate tax revenue—around €12 billion—might be a windfall.

This suggests a real risk: if U.S. tax laws change and profit shifting to Ireland declines, Ireland could quickly see a €12 billion annual drop in tax revenue.

Trump’s key economic policies are trade tariffs, lower domestic taxes, a cut to government spending and an aggressive deregulatory agenda. The first two matter most to us.

According to John Melarkey, Managing Director at Sia Partners, Donald Trump’s reelection is likely to bring "significant changes" for Irish businesses.

"With his pledge to lower the US corporate tax rate to 15%, Ireland's appeal as a tax-efficient location for American multinationals is diminishing, which could lead to a reduction in corporate tax receipts. As US corporations find more incentives to stay domestic or bring operations back to the US, Ireland is seeing a potential dip in foreign direct investment (FDI)".

"For Irish exporters, Trump's protectionist policies will introduce new trade hurdles, with increases in tariffs and other barriers raising export costs to the US and straining Ireland's competitiveness".

Trump’s second term ultimately presents more restrictive policies that Irish businesses are closely monitoring.

While this is merely speculation, the possible result would mean rather than running a healthy surplus, Ireland would be in a financial deficit, meaning cutbacks and likely tax increases.

JOBS

While the Irish economy is the major concern, Trump's approach to international trade could also significantly impact jobs in Ireland's trade-dependent economy, especially through its trade relationship with the U.S.

Trump has historically favored imposing tariffs on imported goods to protect U.S. industries. If he were to reintroduce tariffs on products from the EU, Irish exports to the U.S. could become more expensive and therefore less competitive.

Ireland exports a substantial amount of goods and services to the U.S., especially in sectors like pharmaceuticals, medical devices, and technology. Higher tariffs or restrictive import policies could reduce demand for Irish goods in the U.S., potentially leading to job cuts in affected industries.

The U.S. is a crucial market for Irish service exports, especially in financial services, consulting, IT, and software.

Any protectionist policies aimed at encouraging American firms to contract domestically rather than outsourcing could affect Irish companies that provide services to U.S. clients.

For example, if Trump encourages American companies to retain jobs at home, there could be a reduced demand for Irish-based tech and finance workers who remotely support American firms.

This would particularly impact Irish jobs in tech support, customer service, and professional services, areas where Ireland has seen robust employment growth.

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