Eleven years ago, I sent a speculative email to Wilbur Ross asking him to participate in a television documentary I was making on the influx of capital into post-crash Ireland. 

Ross, a Wall Street titan who made his billions rehabbing distressed assets, was part of a consortium that helped keep Bank of Ireland out of state control. Ross responded within minutes, inviting me to New York two days later. 

In person, he was charming and evangelical about Ireland. “We’re helping a whole country of very deserving people to do better,” he told me, adding that “you can make good gains and yet do good”.

We stayed in touch in the years that followed. Like many of his contacts, I received a polite note in early 2017 stating he was changing his email address after being ratified as Donald Trump’s commerce secretary.

Unlike many of his initial appointments, Ross has remained close to Trump, recently supporting the former president in his successful bid to reclaim the White House. He witnessed, firsthand, how Trump operates, telling Tom recently that it was crucial to separate his inflammatory rhetoric from the reality of his actions. 

“Trump speaks in what I would call metaphor, not literally but figuratively,” Ross told this site. “He likes to make his message simple and bold, and so some of the extreme statements that he made he never fulfilled. It will probably be the same this time.”

Given the brutish, visceral and boorish nature of that rhetoric, separating Trump’s words from deeds is not easy. But, as the world grapples with Trump’s startling victory, a victory so decisive that his mandate to govern is undisputable, let us hope Ross is right.

The immediate focus of policymakers in Ireland is its economic relationship with the US, and the country’s reliance on the corporate tax revenues of a small number of US multinationals. 

Trump intends to slash the federal corporation tax rate from 21 per cent to 15 per cent on domestic production, bringing it in line with the top rate here for large multinationals. Trump also wants to renew his 2017 tax cuts, some of which expire next year, while introducing a 60 per cent tariff on imports from China and 10-20 per cent on imports from elsewhere.

When Trump first took office in 2017, he implemented the 2017 Tax Cuts and Jobs Act. The legislation prompted vast sums to be repatriated back to the US. Research by the economist Brad Setser later revealed that the US shifted $173 billion out of Ireland and back to the US. 

Nonetheless, the steam of foreign direct investment and jobs continued to flow into Ireland from the US. The fear this time is that Trump, with institutional knowledge from his first term and a supportive Congress, will go further. 

Jack Chambers, the finance minister, was quick to warn that future FDI could be at risk from a “more interventionist industrial policy” which now appears “likely” following Trump’s victory.

The proposals, as outlined by Trump, certainly pose a fundamental risk to the Irish economic model. But it is important to put that risk in context. 

The most immediate manifestation of Trump’s policies will be a slowdown of FDI announcements from the US. In truth, it’s already happening as evidenced by the recent data from the IDA. The agency’s half-year report in July said it supported 131 investments “enabling the future delivery” of 8,900 jobs so far this year, down from the 139 investments and 12,072 jobs secured during the same period last year.

But Trump’s victory will lead to a further deceleration of the project pipeline.  

For some companies, Trump’s plans to reduce the US corporate tax rate will lessen the attractiveness of locating in Ireland. But, for the corporations with operations in Ireland, it should not make too much of a difference, provided the US does not seek to double tax the US corporations on their Irish profits.

“We have to see exactly what the policies of that administration are. As it has always done when there is a transition, it will take months before that becomes absolutely clear,” Martin Shanahan, the former head of IDA Ireland told Thomas in advance of the election. “It is at that point that, really, investors will engage.”

In his interview with Tom, Wilbur Ross backed up this point, arguing it would be hard for US pharma plants to relocate their Irish operations. Plus, he said US firms still needed an entry point into the European market. 

“Ireland is a jumping-off place for American companies in Europe. Where else are they going to go? You need a European headquarters, where else would you put it if you didn’t put it in Ireland?” he said. 

The great fear, however, is the impact of a Trump presidency on the global economy, particularly viewed through the prism of tariffs and mooted trade wars. 

A government briefing note has flagged concerns about the future relationship between the EU and the US, particularly the possibility of Trump imposing tariffs on EU goods, followed by retaliation from Europe.

One government policymaker told me last week that it would take a year to determine the wider economic ramifications of a Trump presidency, particularly in relation to FDI and corporation tax. 

This was something Dan examined in great detail in his article on Friday, when assessing the trading data between Ireland and the US, particularly in relation to chemicals and pharmaceuticals. 

As Dan put it: “All of this amounts to a Brexit-scale challenge for Ireland. It also requires a Brexit-scale response. A mapping exercise of the impact of blanket or even wide-ranging tariffs is needed to assess where most damage would be done, identify where lobbying in Brussels and Washington would yield the greatest results and raise awareness among smaller Irish businesses who don’t have the horizon-scanning capacities of multinationals. As US tariffs pose the biggest near-term risk to the Irish economy, that exercise needs to start now.”

Of more immediate concern, he said, was the impact of Trump’s geopolitical policies, particularly his stance on the conflicts in the Middle East and Ukraine. 

Immigration has become a flashpoint in Europe and Ireland. The fear is that Trump’s policies will trigger a wave of migration that Western European countries are unable to accommodate.

Trump’s election has changed the political and economic dynamic; he brings his own unique, and, at times, disturbing brand of chaos.

And the new government, whatever composition it may take, must figure out a way of dealing with that chaos.  

Just as the country steeled itself in the aftermath of the Brexit vote, our policymakers need to model out the impact of the various Trumpian policies and react accordingly.

The trouble, however, is that the chaos is not just coming from the US.

Political upheaval appears to be spreading at an alarming rate. The German ruling coalition effectively collapsed on Wednesday night when Social Democrat Chancellor Olaf Scholz fired Minister for Finance Christian Lindner, cutting ties with his centrist Free Democratic Party.

Government allies in Berlin have disagreed on mostly everything for months, from climate policy to funding for military aid to Ukraine. Dire economic news exemplified by unprecedented job cuts and factory closures at car manufacturer Volkswagen exacerbated the split and Germany now faces a likely general election in the new year, months after a far-right surge in regional polls.

In France, Prime Minister Michel Barnier is finding it harder to pass a budget through parliament than he did to negotiate a Brexit deal in the past. The hung National Assembly resulting from President Emmanuel Macron’s ill-advised snap election in the summer is further away from adopting Barnier’s budget now than it was when he presented his draft a month ago.

Countless opposition amendments have removed any chance that the resulting text will secure an overall majority vote. Confidence motions are a likely outcome and Barnier’s future is uncertain.

Amid this background, Ireland has been a beacon of certainty, of political calm. 

On Friday, Simon Harris made his way to Áras an Uachtaráin to seek the dissolution of the Dáil, triggering a well-flagged general election. With public finances buoyant, the Government will argue over the coming weeks that it has prepared the country to deal with potential economic shocks, just as it had the reserves to navigate the country through the pandemic and the cost-of-living crisis that followed.  

The election will be fought on issues such as health, education, and housing, and, over the coming weeks, we will examine the policies and the manifestos of the various parties in great detail. 

But, in such an uncertain world, the current coalition will no doubt seek to highlight the relative economic and political certainty. 

Donald Trump brings chaos, rhetorical or otherwise. The Irish economic model is based on certainty. The priority for the next government will be to maintain certainty amid such chaos. Much depends on it.  

Elsewhere last week…

A stand-out rugby player, Brendan Mullin’s finance and banking career ended in ignominy, near-bankruptcy and now a criminal conviction. In sentencing, his saving grace may well be that he stuck around to face the music. Francesca told the story of where it all went wrong for Brendan Mullin.

Nicky and Ella Dwyer are the founders of Drobey based in Monkstown, Co Dublin. As they gear up for the Christmas party market, they explain how they plan to grow further.

Gerard Casey, the son of a Tipperary cattle dealer, wants to accelerate growth at Cantor Fitzgerald Ireland – both organically and through acquisitions. In a wide-ranging interview, the former Goldman Sachs trader sets out his plan.

The judicial review of Codling’s foreshore licence highlights the roadblocks facing Ireland’s offshore wind development and the tension between conflicting climate and habitat imperatives. It has now been decided. Alice had the story.