John Whelan: Irish exporters need political tranquillity

The OECD last Wednesday cut its forecast for German economic growth next year. Deutsche Banks’s CEO, Christian Fleming at a banking summit in London during the week said Germany needs to adjust its business model, calling for less regulation and lower taxes on business.

The political dispute which tipped President Macron‘s premier Michel Barnier over the edge, rejecting the 2025 annual budget, suggests it will now be even harder to address the country’s economic woes. With a deficit of over 6% of GDP, France already has the worst budget imbalance in the eurozone.

Irish exporters were firing on all cylinders throughout 2024, with exports in September, being the highest monthly on record. Many were hoping for a stable European market, to counter the likelihood of tariffs damaging trade with the important US market.

Many other exporters, however, are quietly euphoric about President Trump’s plans to cut taxes and lighten regulation and are banking on the continued rapid expansion of Irish goods exports to the market, which raced ahead by a whopping 64 % in September.

Ireland is not the only country to have gained from the increases in cross-border trading in the past year. The United Nations (UNCTAD) announced last week that world trade is about to reach a record in 2024, breaking through the $3tr mark. They indicate that the increase is largely determined by the increase in trade in services, in which Ireland excels, and which accounted for half of the global growth.

However, the UN report points to uncertainty looming over 2025, amid risks of trade wars and ongoing political turmoil in many markets. In particular, they point to potential US trade policy shifts under the Trump administration, including the much-projected tariff increases. Such measures they state risk triggering retaliation, with ripples affecting industries and economies along the supply chain.

Of particular concern, and reinforced by the UN report, is the statement that countries most exposed to changes in US policy changes are likely to be those with large trade surpluses with the US. Based on the latest statistics Ireland is one of the top five countries in terms of goods trade surpluses, which is expected to exceed €47bn in the current year.

The fact that Ireland buys more from the US in computer and business services, appears not to be recognised by Mr Trump's choice for commerce secretary, Howard Lutnick, stating on the pre-election campaign trail that it's "nonsense that Ireland of all places runs a trade surplus at our expense…when we end this nonsense, America will be a truly great country again". Most annoying is that Lutnick should know better, with his background in selling services internationally from his Irish-based company Cantor Fitzgerald.

The big technology companies, including Apple, Intel, Amazon, Facebook and Google, that have driven much of Ireland’s exports across this and prior years, may have been hoping to get an easy ride under Trump. But, they may be mistaken, judging by his statement on his social media platform Truth Social, that Big Tech has run wild for years, suggests he wants to keep pursuing them with antitrust crackdowns.

The common refrain amongst executives is that what happens in politics and what happens in business, are not the same thing. But, there is no doubt that an outbreak of political tranquillity in Germany and France would be helpful for European and Irish businesses. In the US, the post-Trump election jump in the stock market has benefited a wide range of companies, both in Ireland and internationally, despite the more outlandish statements of the US political leader.

It is to be hoped that the incoming Trump administration will continue the trend of strengthening export controls and heavy tariff increases on exports destined for China and give Europe a break.

While Santa may bring peace and joy, the new year is likely to bring much turbulence.