John Whelan: Trade wars spell trouble for exporters like Ireland

Inevitably, the EU will be affected, as surplus products unable to reach the US market, look to be sold in Europe.

Irish exporters and importers can expect further disruption to their supply lines as China responds, as the EU decides on the best mechanism to protect its own industries. 

The new tariffs, which come into effect in phases between 2024 and 2026, are primarily targeted at industries where China can outcompete foreign rivals. 

The EU ranks China as the largest source of imported goods and has strong concerns that its manufacturing base is being eroded by Chinese imports. 

Global supplier

In Ireland’s case, the total value of imports of goods from China last year was €10.7bn, meaning the Asian giant was the fourth largest global supplier to Irish industry.

China, whose share by value of the global manufacturing industry has increased to 34%, has warned that the US move "will seriously affect the atmosphere of bilateral cooperation" and called on US president Joe Biden to immediately cancel the additional tariffs. 

However, there will be no going back by the US administration, which has been reviewing China'a trade, and will be keen to sway voters in an election year. 

The new measures affect $18bn (€16.6bn) of imports, including steel, aluminium, computer chips, solar cells, cranes, and medical products. 

The 100% tariff on Chinese-made electric vehicles made the headlines, but none of the tariff increases are small fry: Semiconductor tariffs will double to 50%, tariffs on solar cells also go up to 50%, and some medical supplies, including syringes and needles, and ship-to-shore cranes will also be subject to higher taxes.

European Commission president Ursula von der Leyen has been under pressure for some time from motor manufacturers in France, Germany, Italy, and Spain to tackle Chinese electric cars entering the European market. 

She said last year, the EU would launch an anti-subsidy investigation into electric cars and subsequently, the commission has launched high-profile probes targeting Chinese manufacturers, solar panels, railway carriages, and communications equipment. 

Increased urgency

The US move to control Chinese imports brings increased urgency. 

Increasing geopolitical and economic tensions between China, the US, and increasingly with the EU, have put pressure on Ireland.

China's apparent “no limits” friendship with Russia, irrespective of Moscow’s war against Ukraine, has changed the former favourable views held by many European countries, including that of Ireland, towards China.  

There has been a significant change in the position of Chinese premier Xi Jinping since his visit to Ireland over 10 years ago. 

The then vice president showed none of the tendencies to authoritarian rule that he has since imposed on China. 

Concerns on the abuse of civil liberties for certain sections of the population have also been a bone of contention. 

However, China and the US remain, and are likely to remain, leading markets for Irish goods and services. 

The US has been the most important source of foreign direct investment for Ireland for decades, and will hopefully remain so for some years to come.

Clearly, there has yet to be full agreement in the EU on how to carry out any policy of de-risking trade dependence on China. 

However, even if there is no agreement, there is still an urgent need for some sort of strategic thinking on the issue.

A further escalation of tensions and a lack of global action to address social and environmental concerns could lead to a de-globalisation process that will likely have stronger-than-average implications for major exporters, like Ireland. 

• John Whelan is a leading expert on Irish and international trade flows