A trade war between the United States and the European Union could have “quite nasty” ramifications for the Irish tech sector, particularly if Europe deploys its “big bazooka” anti-coercion instrument, Bank of Ireland has said.
US President Donald Trump said earlier this week his government would impose 10 per cent import tariffs on goods from eight EU states from next month, rising to 25 per cent in June, unless there was a deal for “the complete and total purchase of Greenland”.
In response, French president Emmanuel Macron said the EU should “not hesitate” to use its anti-coercion instrument for the first time as the diplomatic fallout from Mr Trump’s plan has deepened.
The instrument would give the EU wide-ranging freedom to restrict US companies’ ability to operate in the European market. That could include special tariffs on tech giants and other industries, import and export restrictions, and blocking bids on public contracts.
During a conference outlining Bank of Ireland’s market outlook for 2026 on Wednesday, group chief economist Conall Mac Coille said such a move would have far-reaching consequences for the Irish tech sector.
“This is intended to prevent market access for US tech firms, including their subsidiaries here in Ireland – Google, Facebook etc – from accessing the EU market,” he said.
“It could suspend intellectual property rights. It could suspend streaming services like Netflix. You might also see the use of digital services taxes potentially. That’s where there is a risk of these issues around tariffs spilling into the corporate tax base.
“This could become quite nasty for the tech sector in Ireland if trade relations continue to deteriorate and we see the anti-coercion instrument deployed.”
Dan O’Brien, chief economist of the Institute of International and European Affairs, said the “worst case scenario is extremely bad for this country”.
“There have been a number of times when tariffs have been threatened and it has come to nothing, so hopefully in this case it will come to nothing,” he said.
“If it doesn’t, and these tariffs are imposed in February, I feel very strongly that the Europeans won’t back down this time and there will be retaliation. The big risk is we get into a tit-for-tat scenario or transatlantic economic war. There is a lot each side can do to hurt the other.”
On the Irish economy more broadly, Mr Mac Coille said the State is currently in the midst of a slowdown, and that the days of 3 per cent job growth are “behind us”.
“The economy is starting to slow down towards a more sustainable pace over the next four or five years,” he said. “The days of 3 per cent job growth are behind us. We have seen a slowdown already, with job creation up only 1 per cent in the 12 months to the third quarter.
“It’s a hell of a slowdown. In the background here are labour shortages and the fact that net migration is starting to slow. The risk is that this slowdown might be more pernicious than we are hoping, which is around 1.5 per cent rather than 3 per cent.
“If you look at income tax growth last year, it was one of the slowest rates of increase we have seen in the past 10 years. Things seem to be coming off the boil of late.
“The sectors that are doing well are industry and manufacturing, while in the public sector it is education and health. When you look at consumer-facing sectors like wholesale, retail, hotels and restaurants, and also ICT, those are now beginning to detract from growth.”
Mr Mac Coille said the level of employment in the multinational sector has been broadly flat over the past 10 years. “We haven’t seen this since the Celtic Tiger period,” he added. “The days of 6-7 per cent growth in the multinational sector are clearly behind us.”