One-third of Ireland’s exports are routed to the US, more than to either the United Kingdom or Germany, and American multinationals have been the main source of foreign direct investment for the last 50 years.

For the last five years, payments of corporation tax by American firms have propelled a budget surplus despite the surge in public spending and the ongoing flurry of pre-election tax cuts.

Trade access to US markets and the tax bonanza are under threat with the focus on protectionism in the recent US election.

Things might have looked less threatening with a victory for the Democrats, but the differences can be exaggerated – the Biden administration had also veered towards protectionism, and the free-trading international order is facing challenges whoever wins elections in the US.

Trump’s victory has included a Republican majority in the 100-seat senate, and a likely majority in the 435-seat House of Representatives when the votes are finally counted.

This matters because the US system does not assign all powers to the president.

Both houses of congress matter and presidents, including Donald Trump in his first term after the 2018 mid-term elections, have sometimes had to manage an uncooperative senate, or House of Representatives, or both.

Some decisions fall under presidential discretion, some are for congress and some end up in disputes and court battles. There will be mid-term elections in 2026 when one-third of the six-year senate seats are contested by rotation, along with all 435 seats in the house.

Presidents often lose majorities in the house in mid-term and can face a lame-duck final two years of their four-year term.

The current betting, according to Newsweek, is that the Republicans should retain the senate in 2026 given the non-random 33 seats to be contested but could lose the house, as the incumbent president often does. Trump may feel that the best way to execute his policy agenda is to get started straight away.

Key issues

The key issues for Ireland arising from the Trump agenda are corporation tax and tariffs. US companies enjoy, and employ effectively, a designer loophole in the US tax code which permits them to park profits abroad – the alternative, to tax worldwide profits in the USA, is well understood in America and has its supporters.

They have never prevailed. Any change here would have to secure support from congress, and there is no specific proposal in the Republican arty platform, adopted at the convention in Chicago in July.

The platform was however emphatic about tariffs and protectionism, to which a whole chapter is devoted: ‘The Republican Party stands for a patriotic “America first” economic policy.

“Republicans offer a robust plan to protect American workers, farmers, and industries from unfair foreign competition.” It continues: “Our trade deficit in goods has grown to over $1 trillion dollars a year. Republicans will support baseline tariffs on foreign-made goods, pass the Trump reciprocal trade act, and respond to unfair trading practices.”

Donald Trump is on the record that tariff is “the most beautiful word in the dictionary” and has spoken about the case for retaliatory tariffs against, for example, the Mexican car industry as punishment for failure to control illegal migrant inflows from Guatemala and Honduras across Mexico’s southern frontier.

He regards international trade as a zero-sum game, rigged against America, and subscribes to a version of the doctrine of mercantilism, abandoned by economists in the eighteenth century.

Under legislation dating back to 1962, congress has devolved to the president decisions to increase or reduce tariffs where there is a national security concern, but use of the authority to impose tariffs for protectionist reasons, as Trump has promised, would face legal challenge.

The new administration may seek to impose tariffs unilaterally, and Trump has spoken of a 10-20% tariff on all-comers, covering all goods imports, with a threatened 60% for China.

But the US will be constrained by existing trade agreements, for example with Canada and Mexico, members of the North American Free Trade Agreement with the USA, and also by countries that negotiate trade deals jointly, most importantly the European Union.

There is also a straight conflict with economic reality. Across-the-board, tariffs are not in the interests of the US economy whatever the campaign rhetoric. It does not follow that goods no longer imported into the US will promptly, or ever, be substituted with domestic production, not least because the US is currently close to full employment.

The US does not have vast expanses of empty factories ready to take up the slack, nor qualified personnel to staff them. Corporate America is not naive about the costs of protectionism either.

The European Union has commenced a low-intensity trade conflict with China, as has the US under Biden, but it is premature to over-react. It could all prove to be bluster.