The chief executive of employers’ group Ibec, Danny McCoy, has said that the EU should retaliate with its own tariffs on the US and has warned that in the short term the impact on US consumers and the world was potentially damaging.
“I don't think we have any choice as Europeans. The vulnerabilities of Europe have been exposed now on the defence. We've got Russia invading into our area.
"This is perilous for the people of the European Union, and particularly those on the Eastern flank of the EU. We all have to actually, as Europeans now, stand by Europe on this one, unfortunately.
"We wouldn't like to be in this situation, but it is a situation where we've got to choose a side.”
Speaking on RTÉ radio’s Today with Claire Byrne show, Mr McCoy questioned would the US President be consistent or was the threat of tariffs “a bluff.”
“Does he really mean it? If he really means it, then he doesn't understand the dynamics of what he's dealing with because the complexity in supply chain for car manufacturing or pharma is a lot more complicated than ‘everything back to America’ and in the short-term tariffs are going to make the consumers worse off and the voters worse off. So the timing won't suit here in terms of those long-term plays.
"Yes, you will see the car manufacturers or the Taiwanese semiconductors more production would be promised to be done in the United States, but in the short term, the costs are going to be very high to US consumers and ultimately to the world.
"But as I keep saying, Donald Trump has unleashed something on the United States that he believes he can control and I don't believe he can.”
Mr McCoy pointed out that while the United States was “the most powerful nation on earth”, economically it was one fifth of the earth which meant that four fifths of the earth had choices to make.
In the past they had trusted the United States, but in recent months the United States was “looking like a very risky partner and that's going to have long-term consequences of United States in terms of goodwill, in terms of people buying their bonds because United States has huge debts, they need to service those debts and a lot of that is coming from foreign capital including European capital and so there's going to be a premium for risk for the United States going to make it more expensive for him to do the things that he wants to do in terms, of defence spending, health spending, education. So he's really putting the United States at risk, primarily, and then by a knock-on consequence the rest of the world.”
The prospect of tariffs was very serious, “if he stays the course”, but “he could change his mind the following day,” he added.
“It's this uncertainty where a lot of corporations now really have to make a decision about, will they go back to the United States or not? Because their shareholders aren't just U.S. citizens.
"Their shareholders are Europeans, they're Asians and so on. And so these corporations have to make a big decision. Can they trust the administration in the United States to actually stay the course? And can their assets actually be protected if they bring them back to the United States?
“If I was a chief executive of one of those corporations right now and my shareholders and my board, you're looking at the United States saying 'is that a predictable place to go back to' because it's not owned by United States citizens. These are global companies.”
Mr McCoy said that Donald Trump may have started “this dance” and might think he was in control of it, but he had “set off something that even he can’t control.”
“Goodwill is going down the drain here towards the United States. And just like we had with China in terms of decoupling, we find it very hard to decouple now in this globalised world from any jurisdiction, but you start to de-risk.
"And I think that we won't be decoupling from the United States, but a lot of people around the world will start to de-risk, and that's to the detriment of the United States.”
