Ireland’s Department of Revenue has announced the release of an economic analysis examining the impact of tariffs on the country’s economy on 21 March 2025.

The analysis estimates the impact of tariffs on the Irish economy in the event of tariffs being introduced on transatlantic trade, Modified Domestic Demand in Ireland could fall by 1-2% – relative to a no-tariff baseline – over the medium-term. Such a decline could trigger lower employment – again relative to baseline – over the medium-term.

The actual impact on both output and employment would depend on the scale and scope of any tariffs introduced

Given uncertainty around the scale and scope of any tariffs, several scenarios are modelled.

In a scenario in which 10% tariffs are introduced bilaterally on the trade of goods between the US and the rest of the world, Modified Domestic Demand (MDD) in Ireland would be just over 1% below its no-tariff baseline level after five years. In a scenario in which 25% bilateral tariffs are introduced on all goods and services trade between the US and the European Union, MDD in Ireland would be close to 2% lower after five  years.

Importantly, the paper does not account for changes to the firm and sector-specific factors that have produced windfall corporation tax receipts in recent years. As a result, the impact of an escalation in protectionism on the public finances may be higher than is estimated in the paper.

“There is clearly unprecedented levels of uncertainty regarding the global trade architecture and we cannot rule out the possibility of tariffs on transatlantic trade being introduced,” said Minister for Finance Paschal Donohoe, commenting on the publication. “Government must, of course, plan for all eventualities, and the work being published today by my department and the ESRI provides one piece of the analytical jig-saw needed to chart a way forward.”

“Ireland has been a massive beneficiary of globalisation and we remain a strong advocate of free-trade policies. Ireland and the US enjoy a mutually beneficial, two-way economic relationship,” he said, adding, “Government will continue to work to improve the enterprise climate in Ireland, including by ramping-up capital spending in key strategic areas, including energy, water, transport and housing. This is how we will remain competitive against a backdrop of heightened uncertainty.”