US tariff impact on Irish agriculture

The impact of tariffs on Irish exports to the US may be felt most by the pharmaceutical sector, but will also apply to food and drinks.

In 2024, just over 11% or €1.9bn of Irish food and drink exports went to the USA, out of a total of €16.8bn.

However, this impact will not be felt equally across all sectors. For example in 2024, no Irish sheep meat and only a negligible amount of chicken was exported to the US.

While beef exports overall were worth €2.7bn, the US market accounted for just €9m of this and a further €11m of offal.

The US took almost 5% of pig meat exports last year at a value of €23m out of the €490m total, making it a small but not insignificant market.

Drinks - Figure 1

It is only when we look at drinks and dairy exports that the US becomes an important market. It accounted for over 42% of total drinks export last year, or €900m of the total €2.1bn export value of the category overall.

Irish farmer interest in the drinks sector is centred on whiskey and beer, or distilling and brewing, which use an estimated 350,000t of the 2.2m tonnes total of Irish grain annually.

Grain sold for brewing is worth around €40/t more than grain sold for animal feed, and grain going for use in distilling is worth a further €10 per tonne.

The US is the largest market for Irish whiskey exports, worth €450m in 2024 and representing 43% of all whiskey exports, which were worth just over €1bn last year.

The US accounts for an even larger percentage of liqueur exports, taking 47% of the €394m total export value, which was worth €186m in 2024.

Irish dairy is an important ingredient in the production of cream liqueur.

Dairy – Figure 2

Dairy is the largest category in Irish agri food exports, worth €6.5bn last year. Overall, dairy exports to the US in 2024 were worth €830m, which is just under 13% of all dairy exports.

However Irish dairy exports to the US are concentrated on just three categories, butter, cheese and infant food, which between them represented 85% of total Irish dairy exports to the US last year.

Within these, butter stands out, with the US accounting for 30%, or €495m of Irish butter exports in 2024. Irish cheese exports are more diversified, but the US is still important having taken €101m worth last year, just over 7% of total cheese exports.

It also took €113 worth of infant food, representing 13.6% of exports in the category in 2024.

Consequences for farmers

This all means that Irish dairy farmers and butter exporters in particular, that are in the front line for the impact of US tariffs.

All other categories of Irish agri food exports are reasonably well diversified.

As well the US being a large volume market for Irish butter, it is also a particularly high value market.

In 2024, 57,287t, or just under a quarter, of Irish butter export volume was to the US, but the value of these exports was 30% of the total.

This means that Irish butter exports to the US secure a higher value per tonne than the overall average per tonne across all exports.

The best hope for Irish exporters is that the US administration quickly decides to reverse, or at least reduce, the tariffs announced this week. We have been down this road before, with an additional 25% tariff imposed by the US on dairy imports from the EU in October 2019, which remained in place until the middle of 2021.

While this was a drag on the business, Irish butter exports to the US survived the additional tariff. That means that if the new tariffs are short lived, then exporters and farmers may be able to live with them, but if they become a more permanent fixture, then the likelihood of new markets having to be found increases.

If an additional 25% tariff is in place over a longer period or if the rate is higher then Irish butter could get squeezed in the US market. Fortunately, global butter prices have been reasonably robust over recent months, so it should be possible to find alternative markets even though they might be less lucrative. There is also the question of the EU response.

A retaliatory tariff would be insignificant financially as US dairy sales to the EU are small, but symbolically significant. Dairy Industry Ireland, which represents dairy processors, has urged the EU to exclude US dairy from any retaliatory tariffs. US tariffs on imports of Irish agrifood are unwelcome, but their impact will be confined to specific sectors. The challenge for Irish exporters will be to find alternative markets for the most dependent categories, if the additional tariffs continue long enough to reduce the demand from US customers.