I was grateful last week for an invitation from the Irish Business Network to give a breakfast talk to members about the topic on everybody’s lips: President Trump’s declaration of trade war against the rest of the world.
This has caused some trepidation for Irish citizens “back home”, as well as for migrants to the UAE. As the repercussions of Trump’s deluded and destructive policy reverberate around the world, are we better off in Ireland or the Arabian Gulf? In brief, DUB (Dublin airport code) or DXB (Dubai)?
The audience, I was pleased to see, was solidly anti-Trump. Only one person out of around 80 responded in the affirmative to a request from my on-stage host, the capable Aoife O’Gallagher, for a show of hands to the question: “Will Trump’s tariffs work?”
That is in line with the overwhelming consensus among respected and respectable economists, and the opinion of the global financial community, which has reacted to “Liberation Day” (April 2) by selling down US assets – equities, T bills and the dollar.
Even if he is now backtracking on some of the more draconian tariffs, the damage has already been done. Combined with the other flights of Trumpian fancy – the Gaza Riviera, Russia’s “innocence” in Ukraine, annexing Canada – the effect is to destroy faith in “American exceptionalism” for at least the next four years. Who knows after that?
But the immediate consideration is how we react now. The Republic of Ireland, it strikes me, is uniquely vulnerable in the tariff wars.
It is an economy dependent on free trade and foreign direct investment to a high degree, and has developed a tax-efficient infrastructure to attract both – very successfully. Both are under threat from Trump’s tariffs.
Ireland enjoys a significant trade surplus in goods with the USA – €41 billion according to the Irish central statistics office. This swings into deficit if services are taken into account, but for Trump, blindly, it is the trade in goods that matters.
In foreign direct investment, according to the US Bureau of Economic Analysis, the stock of US investment in Ireland stood at $491 billion just over a year ago, making it one of the top destinations for US outward flows. This must now be at risk.
Irish citizens who have made, or are thinking of making, the UAE their home for the duration, will have to weigh up the facts on the ground here
There are 970 US companies in Ireland, the Financial Times recently reported, many of them encouraged there by the 45th President (Trump) in a 2018 tax bill that encouraged US companies – especially in pharmaceuticals and technology – to manufacture there and export back to the USA.
Bizarrely, Trump’s commerce secretary Howard Lutnick now accuses Ireland of being a “tax scam”, while the president says that Ireland “took our pharmaceuticals companies”.
The FT again reported from Westport, a town in County Mayo on Ireland’s far west coast, on a US pharma company that makes the world’s entire supply of Botox. Pharmaceuticals and chemicals, which employ significant numbers of people in Irish rural areas, comprise 91 per cent of Irish exports to America.
Previous presidents, aware of Irish-American roots or the Irish-American vote, may have turned a blind eye. But Trump, of Scots-German lineage, has none of those romantic attachments. You can even argue that Ireland’s robust stance on the conflict in Gaza may have made Trump seek vengeance on behalf of his Israeli allies.
A lot depends on how far Trump rows back from his policy, and how far Ireland can shelter behind the European Union in negotiations, but some experts believe Ireland faces a “perfect storm” of economic turbulence, the worst since the global financial crisis of 2009 which devastated the economy.
Irish citizens who have made, or are thinking of making, the UAE their home for the duration, will have to weigh up the facts on the ground here.
Dubai and the UAE have traditionally been a “safe haven” in troubled economic times, and generally proven correct Jamie Dimon’s maxim from 2009 that “in every crisis there is opportunity”.
But jobs here are becoming harder to come by, the cost of living shows no signs of falling significantly any time soon, and – as 2009 showed – Dubai and the UAE are far from immune to a large-scale crisis in global economic and financial affairs.
Add to this the fact that the UAE lives in a turbulent neighbourhood, where geopolitical tensions can explode at any time.
But for all that, the UAE still looks like a better bet for Irish citizens seeking some kind of refuge in the turbulence of the next four years, and my advice would still be to look east – opt for DXB over DUB.
Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia
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