The inauguration of President Donald Trump in Washington this week was closely watched by Irish exporters for any announcement of trade measures which would directly hit market access.

At the time of going to press, Trump hadn’t yet signalled tariffs or other trade measures against Ireland.

However, it still seems likely that some will be introduced, and even if not, the continued threat of tariffs will mean heightened uncertainty over the trade relationship with the country over the coming four years.

For Irish farmers and food producers, this threat is certainly something which is real, but it is important to be able to quantify the likely effects from any move on tariffs – and also which sectors of Irish agri-food exports will be hit.

Looking at the export numbers, it is clear that the only major export for Irish food products in the US is in the dairy sector, worth almost €900m in the last 12 months.

However, even in dairy, it only makes up around 16% of exports.

For beef, pigment, sheepmeat and crops, exports to the US basically round to zero (see Figure 1).

In the event that there is a tariff placed on Irish exports, the size of that tariff will matter. If it comes in at 10%, it would probably lead to little loss of market share for dairy exports as they are already trading in the premium sector in the US which is less price sensitive.

Add to this the weakening of the euro against the dollar since Trump was elected, which gives Irish exporters a competitive advantage on price, and the effects of relatively small tariffs would hardly be noticed.

For the dairy sector, Asia had been held up as the land of opportunity

If we look at what has happened in other markets for a guide as to the possible outcomes for Irish farmgate prices as a result of changes in the trading landscape, we can see that pessimism can be overstated when it comes to far-flung export markets.

For the dairy sector, Asia had been held up as the land of opportunity. That market has turned in recent years, with exports dropping by €145m to €713m in the past year. There is absolutely no evidence of this drop in price paid for milk to dairy farmers in 2024.

For every sector of the Irish agriculture industry, it is developments in the UK and EU that are far, far more critical.

The data shows that many of these fears were overstated

When the UK voted to leave the EU in 2016, there were major concerns over the future trading relationship with our nearest neighbour. The data shows that many of these fears were overstated.

While there was a slowdown in growth in the value of exports to the UK in the immediate aftermath of the vote – driven more by the plunge in the value of sterling than any actual trade blockages – that growth has returned to trend levels in the last couple of years (see Figure 2).

While the EU economy remains in a period of low and slow growth, the biggest factor which will drive the market there over the medium term is supply.

In Western Europe, farm output faces all the challenges from both regulation and generational renewal that Irish farmers do.

On a structural level, this is good news for Irish farmers as they will be at no particular disadvantage for EU market share from other member states. In fact, the IFA’s livestock chair said this week that there is a continued shortage of supply of beef across Ireland’s main overseas markets.

When it comes to other supplies, there are also threats for Irish exports to both the UK and the EU, but again these should not be overstated. While trade deals the UK has signed with Australia and New Zealand will see more produce from those countries arriving in the UK, Bord Bia CEO Jim O’Toole highlighted in a recent interview with the Irish Farmers Journal that a lot of Irish product does not compete directly on price.

Both the reputation of the product in the UK – where it is seen as a premium offering – and the long-established relationships between Irish processors and UK customers means that a cheaper product from elsewhere will struggle to become a major challenge in the short or medium term.

Dale Crammond said the impact on Irish exporters from the deal would be between €100m and €130m

On the EU side, the Mercosur deal is the challenge which is gathering all the headlines. At the recent Bord Bia Meat Marketing Seminar, Meat Industry Ireland director Dale Crammond said the impact on Irish exporters from the deal would be between €100m and €130m.

Former director for international affairs at the EU Commission John Clarke, speaking on the same panel at the event, said that impact assessments of the deal suggest that it “will not have anything more than a negligible effect in beef prices”.

Comment

When it comes to developments in international trade it is often difficult to see the wood from the trees. Stories about the threats from trade deals, trade tariffs and regulations are often cited as either huge risks or huge opportunities for Irish food exports.

Yet, when we look at the data, a couple of things stand out.

Firstly, geography really matters. Countries trade with the countries that they are closest to.

The advantages from this are numerous for both the buyer and the seller, with shorter supply chains, long-established relationships and customer demand for a familiar product all meaning that price is not always the be-all and end-all of market share.

Secondly, Irish exporters and export bodies have proven very resilient when it comes to facing the challenges presented by the changing trade landscape. While Brexit has inevitably led to some increased friction for trade with the UK, many of the potential roadblocks have been overcome and others have completely failed to materialise.

Lastly, the overall level of farm output in Ireland looks likely to be static at best over the coming years. This means that the growth opportunities for agri-food exports will be more focused on adding value than on increasing output and Irish processors have shown throughout the years that they have been well able for that challenge.