Don't panic, Ireland. Trump will drop his silly tariffs idea

What a week. From Gaza to Canada, Greenland and Panama, not to mention tariffs, the death of USAID, the firing of government employees, and the proposed heist of rare earths from Ukraine, one thing you can say about Donald Trump is that the man is so transparent that, for the first time in decades, a US president is being honest about America's real motives.

Previous presidents hid American power behind lofty principles like "upholding the global liberal order" or protecting the sanctity of the "rule of law" or appealing to the "ideals of the founding fathers" or—the big one—"making the world safe for democracy." Trump, possibly refreshingly, doesn't care about any of that. He is telling it as it is: America is in it for what America can get out of it—and that goes for everything. Trump isn't about reality, he's about ratings, and the man is so endemically mendacious that almost everything he says is either a lie or patent gibberish. Everything is designed for maximum attention. If tariffs on Canadian Club don't grab people's attention, then invading Panama might do the trick. Failing this, what about Gaza as a developer's turnaround fantasy, a sort of Spanish Harlem sur mer, perfect for a bit of gentrification, paid for by the Saudis, policed by US Marines, and with a lucrative kickback to the Don himself? It's all theatre.

Pax Americana 2025 is not so much a well-defined strategy to reshape the world as an exercise in strategic chaos designed to keep everyone guessing, engineered to outrage as many people as possible without any consistency or seriousness that can be depended on.

Binyamin Netanyahu, an extremely serious politician (whether you like him or not, there is no doubting his seriousness), smirked at Trump's unconscionable ethnic cleansing solo run because Netanyahu knows a Trump policy isn't worth the napkin it's written on. Let him rant away for the press.

It's good for ratings, for now.

But "shock and awe" runs its course, and with no substance to back it up, people will eventually react with a collective "meh." We've seen this in Hollywood: when the ratings start to fall, the impresario resorts to more outlandish tricks to keep the audience. In show business—Trump's business—this tactic is dismissed as "jumping the shark."

Trump will hit a "jump the shark" moment when the tactic of strategic chaos—announcing tariffs, then postponing, championing the ethnic cleansing in Gaza when no Arab country will ever support it—runs out of road.

In Trump's attention-grabbing world, there's only so much people will take, particularly if there is a ludicrous sense, like invading Greenland, of absurd theatre about it. Equally silly is the idea that an economy can become rich by trading less. The entire history of economics is one of expanding trade between willing partners. We don't just trade goods and money but ideas, culture, norms, and innovation. As the French sociologist Marcel Mauss observed, "to trade, man must first throw down the spear," meaning that trade, mediated by money, is a force for peace, an alternative to war.

In terms of harsh economics, any tariff strategy only works if there is sufficient domestic production of tariffed goods to allow US companies to quickly replace the goods that have been subjected to tariffs. This is almost certainly not true in the case of the United States with respect to its imports from, say, China (a favoured target). American industry is simply too far behind. The immediate reaction to tariffs would be increases in prices, which will eventually trigger political opposition and a counter-revolution in the price-conscious MAGA ranks.

That said, in the short term, some dramatic escalation of a trade and tariff war with the European Union is definitely in Trump's sights. This brings us to Ireland's exposure. Put simply, we have far more to lose in a trade war with America than any other EU country.

Significant parts of the Irish economy are American rather than European. Let's look at the numbers. A recent blog post by the Brussels-based economic think tank Bruegel shows exports to the US amount to a huge 13.5 percent of Irish GDP. That is almost three times larger than the rest of the EU pack, including, for example, Belgium (4.7 percent), Germany (3.7 percent), the Netherlands (3.2 percent), and France (1.9 percent).

As exports in a modern economy are about interlinked supply chains, another metric focuses on value-added trade flows—the value of output sold abroad, minus the value of imports used in production.

The picture here is clear too. Again, Ireland ranks as by far the most exposed, with roughly 7.8 percent of GDP ending up in final goods and services purchased in the US. We are more than doubly exposed compared with the rate of other exposed countries such as Germany, the Netherlands, and Belgium, which come in at around 3.5 percent.

In the short term, there's nothing we can do about this exposure. No amount of special government task forces can change this structural interdependency of Ireland and the US, albeit much more dominant one way than the other.

It is the culmination of 40 years of policy designed to solder Ireland to corporate America, bringing untold benefits. Corporate America ensured that Ireland acquired a new industrial base, creating a completely modern economy; as I've described it to Americans, the Irish economy is Connecticut with brutal weather.

When all the chaos, theatrics, and performative press conferences die down, tariffs are a tax on shopping, and the one thing we all know is Americans like buying stuff, and the cheaper, the better. The American voter is an American consumer, and the MAGA movement is a movement of spenders, not savers. It's all very well to talk about trade in the abstract, but trade is real, prices are real, and living standards are real, and for Americans, shopping on credit is a way of life. Trump—the messiah of MAGA—is about to interfere with the mythical American Way.

When Pax Americana morphs into Tax Americana, Trump will drop tariffs before the midterm voters drop him. We just have to wait and not panic.

***End of article***

Key Takeaways from the Article:

1. Trump's Unpredictable Approach:

Trump's leadership is characterized by chaos, attention-seeking tactics, and a lack of consistent policy.His focus is on ratings rather than reality, making his policies unreliable and subject to change.

2. Tariffs and Economic Realities:

Trump's tariff strategy is flawed as it ignores the fundamental economic principle that trade fosters wealth and stability. The US lacks sufficient domestic production to replace imported goods, making tariffs likely to cause price hikes and political backlash.

3. Ireland's Unique Vulnerability:

Ireland is disproportionately exposed to US trade policies, with exports to the US making up 13.5% of Irish GDP—far higher than other EU countries. The Irish economy is deeply tied to American corporate investment, making a trade war particularly risky.

4. Strategic Chaos and Global Impact:

Trump's erratic foreign policies, from tariffs to geopolitical moves like Gaza redevelopment, are more about spectacle than strategy. His "strategic chaos" approach is designed to provoke reactions but lacks long-term sustainability.

5. The Limits of Trump's Tactics:

Public fatigue with Trump's theatrics will eventually set in, similar to when TV shows resort to gimmicks to maintain ratings ("jumping the shark").Economic pressures and consumer habits in America will likely force Trump to abandon tariffs before the midterms, as higher prices could erode voter support.

6. Conclusion – No Need to Panic:

While Ireland faces real risks from Trump's trade policies, his reliance on political theatrics over substance means that tariffs are unlikely to last.The article advises patience, as economic realities will likely force Trump to reverse course.

Article: The Irish Times, 8 Feb 2025, Written by: 1. David McWilliams 2. ?? Latest Book Link

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????: Risk to Ireland from an EU-US Trade War:

If the EU retaliates with tariffs on US goods, Ireland's economic conditions could be seriously impacted. The US accounted for 28 per cent of the total value of Irish exports (€54bn), well ahead of Germany, the Republic's next-largest market.?

Last year(2024) the value of Irish goods exports to US was over twice the value of imports, giving a trading surplus of €31 billion with the US. Ten multinational corporations account for 60% of Ireland's corporate tax (CT) receipts. Microsoft contributed more than 15 per cent of Ireland’s total corporate tax take since 2020. Total corporation tax for year 2024, was €39bn, includes €11bn+ windfall from Apple.

Note: World Economics estimates Ireland's 2024 GDP at $689 billion in PPP terms (Purchasing Power Parity) and an initial estimate of $704 billion for 2025. This figure is 12% higher than the official estimate published by the World Bank.