Trump tariff plans a risk to Irish economy – Central Bank

The Central Bank has warned of the risks to the economy from the Trump administration in the United States imposing tariffs and tax changes which would affect US multinationals in Ireland.

In its Quarterly Bulletin, the bank said any changes could affect employment in companies here, hit future investment decisions and corporation tax.

“As the US is Ireland’s largest bilateral trade partner the direct exposure of the economy and public finances to changes in US economic policy is material,” it said.

It added Ireland was “particularly susceptible to changes in US policy”.

It said there has been a dependence on the “substantial corporation tax receipts of recent years” linked to US multinationals.

Only one third of the €15bn windfall taxes from US companies are being saved in two long term funds, but the bank recommended setting aside all the excess corporation tax.

Despite the warnings about the potential changes from the Trump administration, the Central Bank has upgraded its forecast for the Irish domestic economy and said growth will be 3.1% for this year and next.

“With the unemployment rate averaging 4.5% for almost three years, the economy is at full employment and overheating risks are present,” it said.

On the housing crisis, it said growth in residential construction stalled in 2024 but it projected to pick up in 2025.

It said there was a sharp increase in the commencements of new homes this year, partly due to the end of exemptions for fees charged to developers.

In the long term, the bank also highlighted risks to the economy from the ageing population.

“The potential per capita growth rate of the Irish economy is set to halve to around 1.4% by the middle of the century as the working age population declines,” it said.

The bank said enabling people to stay in their jobs for longer could partly off set this decline and support continued sustainable growth in living standards.