Taoiseach says the EU 'can and will' respond to US tariffs

Olivia Kelleher

Taoiseach Micheál Martin has insisted that the EU “can and will respond” to the trade tariffs imposed by US President Donald Trump whilst stressing that a “negotiated pathway” would “ease the carnage on the stock markets.”

Speaking this morning in Cork, Mr Martin said that the EU should engage with the US.

“The EU should be transparent in terms of what could happen. In other words, the Commission will, in all likelihood, produce a list of potential countermeasures.

"They must be designed strategically and, insofar as is possible, not bring more damage onto the European economy."

"But the only way to ease the carnage on the stock markets is for a negotiated pathway between the US and the EU."

"Trade between the two is the largest in the world and 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."

"Basically, I am saying...the EU can respond and will respond."

Mr Martin said that ultimately a trade and tariff war “would damage everybody.”

“Already the world economy is being damaged. Already investments are being paused so it is not good for the world economy.

"It is not good for anybody so therefore, obviously, Europe has the resources to respond and will respond. Ultimately, it has to be a negotiated pathway if we want to see stability brought back to the world economy."

Mr Martin was asked whether the thought that AI had been used to come up for the formula for the tariffs after a respected economist had speculated about same. He said that didn’t seem to be the case.

"I do not know who the respected economist is. 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 to me. The problem in the modern world it's not a problem actually; the beauty of the modern world is that it's interdependent.

21st-century economy

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

"Technology has enabled interdependence. And then, of course, services are not factored in at all to the equation; services are a huge part, a majority part of the modern economy.

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

"So I think the formula used was very, very crude and simplistic. Like a lot of the materials we make here in pharma they go to America to enable companies to finish the product and vice versa if you look at vaccines during Covid-19 there are about 50 parts to a vaccine they were made in countries all over the world the different components they all have to come together eventually to become the medicine that people took and So that's the complexity of the modern world and I don't think tariffs lend themselves to that complexity.”

Mr Martin said that he believes that the tariffs could be reduced through negotiation.

"It's difficult to assess that, but I would like to think yes. I would like to think that negotiation could reduce these tariffs and provide a broader resolution of trading issues between the US and Europe.

"That did happen before, and we are we are in very uncharted territory here but I've always been of a view decisions have consequences and it's very clear that the most recent decisions are having consequences in the United States and therefore very often the push for moderation could come from the United States itself.

"I think there is a lot to play for yet on the pharma side. I spent a lot of time last week engaging with different CEOs of pharmaceutical companies globally – it’s very, very challenging – the world order is changing, but there is a lot of engagement between those companies and President Trump and his administration in terms of how this might ultimately end up.

The Taoiseach called it "challenging"  but said they will have to do everything to reduce the impacts of any decisions that will be taken or shape or shape the ultimate decisions that might be taken by the US administration.

"It's a complex issue, so over time. I think we can hold on to our competitiveness, but it will take a lot of effort and a lot of engagement with the companies, and between Europe and the U,S and Europe itself can do more to support the pharmaceutical industry as well," he said.