Trump, the EU and Putin: The triple threat facing Ireland's FDI in 2026
The EU Commission pledges tougher scrutiny of inbound investment to ensure it adds value.Â
Ireland’s foreign direct investment (FDI) is set to face a challenging year in 2026, as the political volatility driven by President Trump’s dramatic push to increase 'made in America' and President Putin’s invasion of Ukraine has impacted cross-border investment in the second half of the year.
So far, Trump's imposition of tariffs on imports into the US have had a significant role in attracting FDI. On the one hand, it keeps the US as the global leader for inward investment, continuing to attract vast capital from around the globe, as companies scramble to avoid tariffs by moving their manufacturing into the US. But, on the other hand, strangling the traditional outward investment by the many global US corporations, who are under severe pressure by the Trump administration to only invest in America.
This will inevitably impact investments in Ireland, which, even under an optimistic scenario, will slow down US investment, but could eliminate investment for the remaining three years of the Trump administration if political relations become unstable.
A further obstruction to foreign investment plans is also likely to come from the European Commission’s new approach to economic security, unveiled on December 3, which includes making technology transfer a condition of inbound investment. The EU states the proposed legislation will shield high-tech start-ups from strategic takeovers from the likes of US global brands, such as Google, Apple and Microsoft. But it is likely to further stagnate and obstruct the implementation of investment plans in Ireland.
Under the new plan, the Commission pledges tougher scrutiny of inbound investment to ensure it adds value to the EU. It proposes using “targeted... conditioning” of deals to encourage technology transfer by investors.
The plan also states that the Commission will “fully” utilise the Foreign Subsidies Regulation, which tackles the distortion of EU markets by state-backed businesses from China and other countries. It also encourages member states to make full use of state aid possibilities and pledges to develop FDI screening guidelines to encourage more consistent outcomes across member states.
The UN’s World and Investment Report 2025 shows greenfield foreign investment projects in Ireland falling in value over the past five years.
Against this geopolitical background, the IDA’s key focus area for 2026 and beyond is partnering with 1,800 existing foreign clients across the country to identify opportunities to strengthen long-term further investment in Ireland, and primarily targeting investment in jobs under its ’Adapt Intelligently’ Strategy 2025-2029.
The Strategy is the Irish Government’s forecast of FDI in the medium term, delivering €250bn to the Irish economy through client spending on wages, Irish goods and services and capital investment.
However, it does not take into account the Trump administration’s push to prevent overseas investment by US corporations, which continues to be the bedrock of Ireland’s corporation tax income.
The IDA’s strategy is focused on Ireland’s existing enterprise base, which they say provides a strong platform to build Ireland’s digital and AI capabilities. It believes that Ireland can become the location of choice for companies to test, deploy and scale AI into their production and service delivery processes.
The weakness in this strategy is the Government's policies towards data centres, which have caused the country to miss out on the large-scale investment which is essential for AI training and development. Maurice Mortell, the chairman of Digital Infrastructure Ireland (DII), said the data centre moratorium that has been placed on Dublin and the inaction of the country’s Regulation of Utilities (CRU) have hampered progress, pointing out that the CRU has yet to finalise its approach to the essential data centre grid connections across the country. Mortell concluded by saying, "So for the last four years, the industry has been more or less in limbo".
Some support for the IDA strategy may come from Budget 2026, which introduced a range of targeted tax policy changes designed to strengthen Ireland’s position as a destination for Foreign Direct Investment (FDI).
While the measures introduced on the exemption on foreign dividends are positive, further work is required to extend the exemption to foreign branch profits, in order to benchmark against our international competitors. In addition, while the R&D tax credit rate increase is certainly welcome, enhancing the rules around subcontracting and the definition of "qualifying expenditure" will be essential to maintain Ireland’s attractiveness as an innovation hub for FDI.
