US Election 2024: What Does It Mean for the Irish Economy?

With the US presidential election looming, businesses and investors across the globe are closely watching. Ireland, with its strong trade ties to the United States, is no exception. The outcome of the vote will undoubtedly impact the Irish economy, influencing investment, trade, and even tourism.

A $1 Trillion Relationship on the Line

The US is Ireland’s single biggest investor, while Ireland ranks as the seventh largest investor in the United States. This relationship, worth more than $1 trillion, highlights the deep economic interdependence between the two nations.

Businesses in Ireland are cautiously optimistic, emphasizing the need for a stable and predictable environment, regardless of who wins the White House.

“Whatever the democratic outcome decided by the American people, businesses will be ready to work with the new Administration,” said Danny McCoy, CEO of Ibec, Ireland’s main business group. He added, “Outside of the EU, Ireland’s top trade and investment partner is the USA, with the USA accounting for 30.3% of Irish goods exports and 15.5% of Irish goods imports.”

Paul Sweetman, chief executive of the American Chamber, echoed this sentiment. “As a non-partisan organisation, AmCham will work with the next administration to support growth of the two-way business relationship between Ireland and the US,” he stated.

Tax Policies and Foreign Investment

A key area of concern for Irish businesses is the potential impact of US tax policy changes. Democrat Kamala Harris proposes raising the corporate tax rate to 28% if elected, while Republican Donald Trump favors a cut to 15%.

The current corporate tax rate in Ireland is 12.5%, a key factor attracting foreign investment. While it’s unlikely that a US corporate tax rate of 15% would lead to a mass exodus of US multinationals from Ireland, it could potentially influence future investment decisions.

Daryl Hanberry, Partner and Head of Tax & Legal, Deloitte, emphasized the volatility nature of corporate tax receipt reliance, noting that foreign multinationals, though representing a small percentage of Irish businesses, contribute significantly to the country’s turnover and employment.

Trade Wars and Tariffs

Trump’s 2018 tariffs triggered fear of a global trade war, with impacts felt across industries. Should he reclaim the presidency, his proposed tariffs on imports from China and other countries, including Ireland, raise concerns for Irish exporters, especially in the vital pharmaceutical sector.

“Tariffs are effectively a ‘sales tax’ on American households,” Harris countered during the televised debate in September