Taoiseach: Donald Trump’s tariff formula 'crude and simplistic'

Speaking in Cork, Micheál Martin said negotiations with the US may still reduce the current 20% tariff on goods being exported to the country. He said the push for moderation on tariffs may come from within the US itself, as it is already being impacted by the new trade policy.

“The beauty of the modern world is that it's interdependent," Mr Martin said.

"And that's the mistake being made with crude tariffs. It's a 19th-century solution or response to a 21st-century economy. And a 21st-century economy is interdependent. It's a globalised economy.

"Technology has enabled interdependence.” 

It was difficult to assess whether Mr Trump was using the tariffs as a starting point for trade negotiations, he said.

“We are in very uncharted territory here," The Taoiseach said. 

"But I would like to think that negotiation could reduce these tariffs and provide a broader resolution of trading issues between the US and Europe.” 

Global financial markets have already been hammered by Mr Trump’s tariff policy, with European shares freefalling to a 16-month low, plummeting oil prices and crashing Asian equity markets.

Fears are growing that the tariff plan could spark a major trade war, raising already inflated prices, weakening demand and possibly triggering a global recession.

Mr Martin said that engaging with the US was now crucial.

"The only way to ease the carnage on the stock markets is for a negotiated pathway between the US and the EU,” he said.

"Trade between the two is the largest in the world and clearly, it would be a signal for stability if the EU and the US could engage in negotiations to get to a reasonable settlement in these circumstances."

Tariff countermeasures

The European Commission will now “in all likelihood”, produce a list of potential tariff countermeasures. But these “must be designed strategically” to avoid causing further damage to the European economy.

“Europe has the resources to respond and will respond. But ultimately it has to be a negotiated pathway if we want to see stability brought back to the world economy," the Taoiseach said.

"A trade and tariff war would damage everybody. Already, the world economy is being damaged. Already, investments are being paused. It is not good for anybody."

And services have not been factored into the current US tariff equation, even though services have become “a majority part of the modern economy,” Mr Martin said.

"If you factor services in, the difference between EU and US trade is minimal. In the context of €1.7 trillion trade, it's about €50bn.

“In the context of Ireland and the US, we're in deficit if you factor in services.

“So I think the [tariff] formula used was very, very crude and simplistic.” 

Using the pharmaceutical sector as an example, he said that a lot of materials made here go to America, where the product is then finished, and vice versa.

“If you look at vaccines during covid-19, there are about 50 component parts to a vaccine. They were made in countries all over the world. The different components all have to come together eventually to become the medicine that people took.

“That's the complexity of the modern world. And I don't think tariffs lend themselves to that complexity.” 

Responding to comments by economist David McWilliams on Newstalk that he believes the US used artificial intelligence (AI) like ChatGPT to calculate the tariffs, he disagreed that the tariff policy seemed to be AI-generated.

"It didn't seem to me to be an AI formula. The bottom line is the administration was going to introduce a tariff.

“I think the metrics seem somewhat crude.” 

The Taoiseach made the comments after attending the graduation of Enterprise Ireland’s New Frontiers Programme in Munster Technological University on Monday.