The election of the 47th US president will have an impact on the global economy.
No matter who takes the White House, the outcome of the vote will also affect future investment in Ireland.
This is sure to be the subject of much discussion in boardrooms in the United States and Ireland as companies prepare for the inauguration of President Trump or Harris.
The trade and investment relationship between Ireland and the US is worth more than $1 trillion. Not only is the United States the single largest investor in Ireland, it is now the seventh largest investor in the United States.
With days left until Americans go to the polls, Petula Martin is assessing the potential impact on the business climate here.
Irish business leaders are predictably diplomatic when asked who their preferred candidate is in the US presidential election.
“Whatever the democratic outcome is determined by the American people, businesses stand ready to work with the new administration,” Ivec CEO Danny McCoy said.
“Outside the EU, Ireland’s largest trading and investment partner is the United States, which accounts for 30.3% of Irish exports and 15.5% of Irish imports.”
Paul Sweetman, chief executive of the American Chamber, took a similar position.
“As a bipartisan organization, AmCham will work with the incoming administration to support the growth of a two-way business relationship between Ireland and the United States,” he said.
Ireland is currently the seventh largest source of FDI to the United States and is also the international home base for numerous American multinationals.
Sweetman said AmCham has been involved with both the Trump and Biden administrations over the past eight years.
“During this period, Irish investment in the US and US investment in Ireland have grown strongly,” he added.
Reactions are predictable, but predictability is the real priority of markets, economies, and companies. Doing business in an environment of uncertainty is difficult.
In McCoy’s words: “Ibec and Irish businesses are committed to an open, rules-based and positive relationship with the United States, both at national and EU level, which will minimize trade tensions and reduce the cost of doing business.” We will continue to advocate for relationships that reduce and foster enterprise” and innovation. ”
Regardless of who is in power in the United States, there is likely to be a major movement to bring investment back home, including through subsidies to American companies.
Ireland will feel the effects, along with the inflationary effects of American economic nationalism.
Corporate tax
Changes to the U.S. corporate tax rate and global tax reform are likely to be affected by the election results.
If she wins the White House, Democratic candidate Kamala Harris plans to stick with a move proposed by President Joe Biden to raise the U.S. corporate tax rate from 21% to 28%.
That would make the U.S. corporate tax rate one of the highest in the developed world.
The proposed increase would increase government revenue from U.S. companies, but has already drawn criticism from U.S. companies.
In stark contrast, Republican candidate Donald Trump has proposed cutting the corporate tax rate to 15%, the same rate that large US multinationals have been paying in Ireland since its introduction this year. is.
Ireland has seen a rapid increase in corporate tax revenues in recent years. These are the hallmarks of our tax performance, and although our income to date this year has been significantly higher than expected, it is considered a highly volatile source of income.
Corporate tax revenues are concentrated in foreign companies, many of which are US multinationals.
Darryl Hanbury, partner and head of tax and legal affairs at Deloitte, said: “Whoever takes office could change US tax policy and global trade trends, so Irish businesses need to be agile and take advantage of potential We need to be informed about any changes that may occur.”
“Ireland is a small, open economy in which foreign multinationals play an important role. National companies generate an impressive turnover of €920.6 billion and employ over 623,000 people in Ireland in 2022.”
Although many foreign companies have been operating here for decades, establishing links with labor markets and suppliers, FDI remains fluid in nature.
While there is no suggestion that the US corporate tax rate of 15% will lead to an exodus of US multinationals from Ireland, the removal of tax incentives for Ireland could affect future investment decisions in sectors important to Ireland. may have an impact.
Kelley Group CEO Edmund Scanlon was asked this week if the company might relocate if the US corporate tax rate is lowered to a level similar to or lower than Ireland’s after the election. In response, the company stated, “We have no intention of relocating.” A hasty decision to move anywhere. ”
customs duty
In 2018, then-President Donald Trump tweeted that “trade wars are good and easy to win.”
This came a day after the U.S. announced it would impose steep tariffs on steel and aluminum imports to protect U.S. producers.
“Trade wars are good and easy to win when a country is losing billions of dollars in trade with almost every country it does business with,” Trump tweeted.
“For example, if you lose $100 billion with a country and you feel bad for that country, don’t do business with them anymore. We win big. It’s that simple!”
At the time, concerns about an escalating trade war caused stock prices to fall on Wall Street, Asia and Europe, hitting stocks of steelmakers and manufacturers supplying the U.S. market hard.
Trump has promised more aggressive protectionism if he returns to office.
President Trump has said he will impose massive tariffs of up to 60% on trade from China, which will inevitably lead to a trade war between the world’s two largest economies and impact the global economy.
He also said he would impose a 10% tariff on goods from all other countries, including Ireland.
This will be a problem for Irish exporters to the US, including the pharmaceutical sector, which is a large exporter from Ireland to the US market.
Is this just a fancy phrase, or will it become a reality under the Trump administration? He previously threatened to impose similar tariffs on Irish pharmaceutical companies in particular, but this never materialized.
However, the EU is not taking any risks. According to a report in the Financial Times, the EU intends to advise the Trump administration that the EU would be willing to work with the US to increase US exports. If the president is willing to postpone tariffs on U.S. goods, he will seek to enter Europe to increase sales and reduce the trade deficit.
President Trump could see this as a victory, which would be of great benefit to Ireland.
In a televised debate in September, Ms. Harris responded to Mr. Trump’s tariff proposals, saying that the tariffs would effectively be a “sales tax” on American households.
But while imposing its own tariffs, the Biden administration also extended tariffs imposed during the Trump administration.
Democratic candidates haven’t explicitly said whether they will extend it, but their campaign website says it will address “issues of inequity” and “ensure America’s success in semiconductors, clean energy, AI, and other cutting-edge industries of the future.” “We will continue to support the leadership,” the statement said. trade practices by China or its competitors that undermine U.S. workers; ”
playing cards trade
The so-called Trump trade posits the theory that certain industries and financial assets, such as oil drillers and cryptocurrencies, would benefit if the former president regained the White House.
It’s hard to tell cause from effect, but there are signs in the market that the Trump trade is gaining momentum.
Trump Media & Technology Group’s stock price has soared since late September.
The social media company, previously unprofitable, has seen its market value increase by nearly $2 billion.
However, it is unclear whether the group will attract more advertisers if Trump is elected president-elect.
Analysts also point to recent gains in bank stocks, with banks reporting better-than-expected profits, which could explain the rise.
Vice President Kamala Harris has appealed to the industry, but the Trump administration is seen as more friendly towards digital assets.
Bitcoin has risen about 13% over the past week, betting on a second Trump administration.
And even though Republican candidates are hoping for a weaker dollar, currency traders appear to be pricing in a Trump victory, with the dollar nearing its highest level in two-and-a-half months.
Some traders expect his economic policies to boost inflation, lower bond prices and strengthen the dollar.
Investors are wary of linking investment moves to President Trump. That’s because many of the moves could be driven by growing optimism about the economy following recent strong U.S. jobs numbers, for which the Biden administration could take credit. Administration with Kamala Harris as Vice President.
sightseeing
Could the US presidential outcome affect the number of American visitors to Ireland?
According to Eoghan O’Mara Walsh, CEO of the Irish Tourism Industry Federation, no.
“There is an urban legend that the result of a US election always has an impact on tourist numbers in Ireland. If you look back over the past 30 years, tourist numbers actually increased in the year following an election. The only exception was the year after Barak. President Obama’s election in 2008 was caused by the financial crisis. ”
O’Mara Walsh said the main factor influencing tourist numbers to Ireland was air access across the Atlantic.
“Thankfully, we’re in a very good place and we expect it to continue to be good next year,” he said.
But he added that all sectors needed stability, security and economic growth, and that “one candidate seems to offer more stable footing than the other.”
“If President Trump was Mark 2 and his erratic behavior and perhaps trade tariffs and other threats from President Trump, that could potentially undermine credibility,” he said. .
Shannon Airport has seen an increase in visitor numbers from the United States due to improved air access.
U.S. passenger numbers are up 14% (34,000 passengers) so far this year compared to 2023, thanks in part to Delta Air Lines’ return to the New York-JFK route in May.
The airport has hosted U.S. presidents over the decades, from President Kennedy to President Trump. President Trump was on his way to his resort, Trump International Golf Links & Hotel Ireland.
Regarding expected U.S. passenger numbers around Election Day on Nov. 5, an airport spokesperson said no significant impact on passenger numbers is expected.
Domestic travel in the United States will be affected. Delta Air Lines expects its revenue to decline 1% this quarter as people avoid traveling in the two weeks around Election Day and instead vote from home.
United Airlines also said it expects passenger traffic to decline around the election.
