Irish aviation and whiskey face hits as EU's retaliation Trump tariffs takes shape

Irish Independent

4 days ago

Ireland wanted bourbon to be excluded because of the potential damage that the drinks industry here could suffer as a result, while Ryanair has billions of euro worth of planes on order from Boeing in the coming decade.
US president Donald Trump has previously threatened to put a 200pc tariff on imports of European alcoholic beverages in retaliation for tariffs on US alcohol. Such a move would almost wipe out the Irish whiskey sector, which is hugely dependent on exports to America.
Taoiseach Micheál Martin told the Dáil in April that he had discussed the issue directly with Ursula von der Leyen, president of the European Commission, which handles trade policy.
'I [raised] our concerns on the potential inclusion of bourbon and dairy on the proposed list of European Union countermeasures. I am pleased that the concerns of Ireland were fully taken into account,' he said.
While dairy is not included on the EU's new hit list, bourbon is there, along with cars and Boeing aircraft, a move that would affect Ryanair. The airline has orders worth €30bn with Boeing going through to 2034.
The commission is presenting the 206-page list, covering €72bn of annual US imports, to EU member states for final approval. It is shorter than an earlier list, which covered €95bn of goods. The US imports would only be hit in retaliation for higher tariffs from America.
Following much lobbying by EU governments, including Ireland's, which were trying to protect sensitive sectors of their economies, other goods have been dropped from an earlier draft of the list. These include purebred horses, bovine semen and strawberry plants.
The main item is almost €11bn of aircraft and aircraft parts, according to a report by Politico. Also included are €8bn worth of cars and car parts, plus machinery products, some chemicals and medical devices. In agri-food, it includes fruit and vegetables, as well as rum.
There is no proposal as yet as to what level of tariffs would apply to these goods.
The EU list that emerged pre-dates the letter sent last weekend by Mr Trump threatening to impose 30pc tariffs on EU goods if a trade deal is not agreed by the new deadline of August 1. It is actually a response to the earlier 'reciprocal' tariff of 20pc, threatened by Mr Trump in April.
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With pharmaceuticals also in Mr Trump's sights, Tánaiste Simon Harris will hold talks today with representatives from the sector in the US.
Speaking before the meeting, he said the sector is 'critically important for both economies'.
'An important component of Ireland's economic relationship with the US includes significant, mutually beneficial trade and investment partnerships in the pharmaceutical sector,' he said.
'The integrated supply chain in pharma products between the EU, including Ireland and the US, supports rather than threatens our collective transatlantic economic security.'
Speaking in the Dáil, Aontú leader Peadar Tóibín pointed out that the planned EU countermeasures on 'Boeing, bourbon and butter' could result in further US retaliation. This could affect the aircraft leasing sector in Ireland, which is worth €300bn.
There was also a threat to Irish medical devices, worth €16bn, and the Irish whiskey sector, which he said 'is stopping production at the moment'. Up to 90pc of whiskey operations have currently stopped distilling, with their product covered by the existing regime of 10pc tariffs when sold into America.
Mr Martin said the uncertainty and volatility was 'terrible', but the Irish position up to now had been to avoid any escalatory response by Europe.
'Some would have liked a more robust response already, but Europe has played it calm and firm,' he said. 'We had good reason to believe that there was a deal on the table, an outline framework agreement in principle, a couple of days ago. At the weekend that all changed.'
A 30pc tariff would be unsustainable and would have to be met with an EU response, Mr Martin said.
In what amounts to a sop to the US administration, however, a plan to make warning labels on alcohol mandatory from next year is now expected to be pushed back to 2029.
Alcohol labelling was cited as a significant barrier to American exports in a report published earlier this year by the Office of the United States Trade Representative.
The continuing threat of a 30pc tariff on EU imports is now having an effect on the framing of this autumn's budget and even for the completion of the National Development Plan, Mr Martin also told the Dáil.
The European Commission has put off until August 6 a separate plan to slap ­tariffs on €21bn of US imports in response to levies put on steel, aluminium and cars going into America from Europe.