US 10 Percent Tariffs Could Slow 2026 GDP Growth Says Finance Dept

Ireland’s economy faces significant challenges due to the potential continuation of U.S. tariffs on European Union imports. The Irish Department of Finance projects that maintaining a 10% tariff could reduce the nation’s Gross Domestic Product (GDP) by 1.5 percentage points in 2026. This downturn would also affect the domestic economy and employment growth, with an estimated 25,000 fewer jobs by the end of next year .

Economic Projections Amid Tariff Uncertainty

The Department of Finance has outlined two scenarios for Ireland’s economic trajectory. Without tariffs, GDP is expected to grow by 4.1% this year and 3.4% in 2026, with the domestic economy expanding by 2.5% and 2.8%, respectively. However, if the 10% tariffs persist, GDP growth could slow to 2%, and domestic growth may decrease to 1.5% .

Minister for Finance Paschal Donohoe emphasized the prevailing uncertainty, noting that higher levels of uncertainty negatively impact global growth. He highlighted that the latest income tax figures, showing a 4.8% increase in Exchequer Returns, indicate the economy’s continued strong performance.

Sectoral Impacts and Employment Concerns

The Irish economy’s reliance on multinational corporations, particularly in the pharmaceutical and technology sectors, makes it vulnerable to trade disruptions. U.S. tariffs targeting these industries could lead to significant job losses and reduced tax revenues. The Department of Finance estimates that employment growth could be 0.5 percentage points lower, translating to approximately 25,000 fewer jobs by the end of next year .

Consumer sentiment in Ireland has also declined sharply for the second consecutive month, reaching its lowest level in two years. This downturn reflects growing concerns over the economic impact of U.S. tariffs and the broader uncertainty in global trade .

Government Response and Future Outlook

In response to these challenges, the Irish government is closely monitoring the situation and preparing for various outcomes. Minister Donohoe acknowledged the potential for further developments that could affect Ireland’s economy and stressed the importance of planning for all eventualities. He also expressed concern over the threatened tariffs on film exports to the U.S., highlighting the potential impact on the Irish media sector.

As the situation evolves, Ireland’s economic outlook will depend on the resolution of trade tensions and the country’s ability to adapt to changing global conditions. The government’s focus remains on maintaining economic stability and supporting sectors most affected by international trade policies.