Ireland's economy faces uncertainty amid Trump’s return to power

Ireland’s financial stability, built on its low corporate tax rates and reliance on US multinationals, could face significant risks following Donald Trump’s re-election to the US presidency.

If Trump follows through on his plans to reduce corporate tax rates and incentivize US companies to bring production and intellectual property (IP) back to the United States, Ireland’s economy could be severely impacted.

Impact on Ireland’s tax revenue
US-owned multinationals currently contribute heavily to Ireland’s corporate tax revenues. Around 11% of the Irish workforce is employed by US companies, and three major firms—Apple, Google, and Microsoft—account for nearly half of the country’s total corporate tax receipts.

Over the past decade, Ireland has seen a surge in corporate tax revenue, from €4.6 billion in 2014 to an estimated €30 billion in 2024, largely driven by multinationals shifting valuable IP assets to the country.

However, this model is now at risk. If Trump’s tax cuts encourage US companies to move their IP back to the US Ireland could see a major loss in tax revenue.

"If just one of those multinationals decides to relocate their IP to the US, that could effectively rupture the health budget in Ireland," said Aidan Regan, a political economy professor at University College Dublin.

Fiscal risks for Ireland
Experts warn that the growing dependence on corporate tax receipts from a few large companies makes Ireland’s fiscal strategy increasingly risky.

Eddie Casey, chief economist at Ireland’s fiscal watchdog, emphasized that without this “windfall,” the country could face a deficit, with Ireland’s public finances potentially slipping from a surplus of 2.9% of national income to a deficit of nearly 2%.

Despite these concerns, Irish officials remain optimistic, pointing out that past US corporate tax reforms during Trump’s first term did not result in a massive financial crisis.

However, analysts like Dermot O'Leary, chief economist at Goodbody Stockbrokers, caution that Trump’s return to office could still pose a real challenge for Ireland's economic future, especially if US companies decide to repatriate more IP.

Market Reactions and Global Implications
Trump’s historic re-election has sent shockwaves through global financial markets.

On Wall Street, US stocks hit record highs, with banks performing particularly well, and the US dollar posted its largest gain in eight years, up about 1.65% against major currencies like the euro, pound, and yen.

Bitcoin also surged to an all-time high, reaching nearly $76,000, following Trump’s promise to make the US a "bitcoin superpower."

The soaring US dollar and rising bond yields suggest that markets expect Trump’s policies—particularly his plans to cut taxes and raise tariffs—could push inflation higher and slow the pace of interest rate cuts by the US Federal Reserve.

This would likely lead to higher returns on US dollar-denominated investments, which could affect global capital flows, including those to Ireland.

Trade and Tariffs Concerns
Trump’s trade policies, especially his stance on raising tariffs, could also create ripples in the global economy. Economists warn that the US could impose significant tariffs on countries like China, Europe, and the UK, potentially slowing economic growth in those regions.

Chancellor Rachel Reeves of the UK expressed concerns that such protectionist measures could hurt the global economy, including the Irish market, given its integration with international trade.

In Asia, Trump’s protectionist platform has already caused anxiety, particularly in China, where there are fears of further US trade restrictions.

This could lead to further disruptions in global supply chains, especially in critical sectors like technology and semiconductors, where Taiwan plays a key role in production.

Bitcoin and economic shifts
Trump’s pro-crypto stance has also added an unpredictable element to global markets.

The US stock market and cryptocurrency markets reacted positively to his election victory, with Bitcoin hitting a new all-time high as investors anticipated Trump’s push to embrace cryptocurrencies.

This stance is in stark contrast to the Biden administration, which has implemented a crackdown on crypto firms. T

rump’s proposed changes to financial and tech regulations, including potentially appointing Elon Musk to audit government spending, have raised hopes among tech investors, with shares of companies like Tesla, which holds significant Bitcoin assets, soaring after the election.

While Ireland’s government has weathered similar challenges during Trump’s first term, the risks associated with the US president’s proposed corporate tax cuts, tariffs, and economic policies cannot be ignored