Historically, Ireland is not particularly wealthy, and it shares that historic memory with the Irish diaspora in the United States, whose descendants now occupy key political positions of influence on both sides of the US Congressional divide.

Yet, Ireland came in as the wealthiest country in the world of all the 90 economies surveyed in the Economist newspaper’s annual The World in 2025 report, measured on a GDP per capita basis.

On a balance of payments basis, it is also outrageously wealthy, with a balance of payments surplus trending above 10% of GDP, in recent years, and trending even higher in the past 18 months, to a latest total in Q3 2024 of 16.7% of GDP according to the CSO. These benign, very benign, economic metrics are repeated in other areas, such as in the Exchequer finances, in the closely analysed Corporation Tax returns, most recently repeated in the results for January 2025, just released before publication of this report, showing aggregate tax revenues up 7% year on year on January 2024.

It is no wonder that envious eyes are cast on Ireland, and indeed, that there may well be corroboration on such envious, and erroneous, conclusions in the context of the new US President’s advocacy of tariffs as a strategic tool in his political armoury.

But these conclusions would be misleading, and wrong in some very important cases.

It will be important that Ireland through its diplomatic channels, and historically established channels such as its state investment agency, IDA Ireland, to communicate this message to Washington, and more widely, including within the European Union, in the months and years to come.

The Economic Appraisal
Firstly, the impression of Irish relative affluence is based on income data, not wealth data. Income measures the current, dynamic, state of affairs, but not the historic. The data also show that Irish wealth per capita, although climbing, also, in international league tables it is in the upper half of the league tables rather than at the top.

Ranked by UBS, Ireland on a wealth per capita basis in 2023 stood at 117% of the EU average, and 21st in a world list of 160 countries. By comparison with the US, it was 44.2% of the average mean per capita wealth, and 71.3% of the UK’s.

When it comes to the precise makeup of Irish trade and investment flows, the balance of payments statistics from the CSO reveal much.
The national Balance of Payments Accounts of all countries have two parts, exactly analogous to the division in private corporate accounts between a Profit and Loss Account (measuring net income flows during a period of time, usually a year) and the balance sheet, an account of the net assets of an entity at a point in time.

If there is a deficit or surplus in the Balance of Payments (Current Account) of a nation, there will have to be an equal reconciliation of that with the balance sheet of that nation at the end of the relevant period. That movement is measured by what National Accounts in economics terminology describes as the “Capital Account” of the balance of payments.

It follows therefore, that if there is a large balance of payments surplus, there will be, there has to be, an equally large deficit on the other side of the balance sheet to make sure the assets and liabilities are matched.

Therefore one would expect the huge Irish balance of payments surplus to be matched by huge movements on the Capital Account of the Irish balance of payments account.

And indeed, when the numbers, (as published by the Irish Central Statistics office) are examined, there are.

On further examination, it will be seen that the bulk of those capital movements are capital transfers, in the form of equity remuneration (dividends), and intra-corporate profit account transfers. These are described as ‘branch transfers’ to overseas multinational corporations, in, predominantly, the United States of America by the CSO in the Irish balance of payments accounts.

The figures confirm the concept that Ireland is a place where US companies can go to avail of more moderate rates of tax to access not alone markets that the US is closed out of by external tariff walls, such as the EU’s, but indeed the United States itself. This has helped those companies to shield their earnings from higher domestic corporation taxes that makes their products more expensive to deliver in the US market (such as prescription drugs). Ireland is working as a platform that enables US owned companies to minimise their international corporate tax burden, the figures show, a validation of the conscious strategies of Irish Governments over the decades to do so.

When it comes to the large Ireland-US pharma industry, the picture becomes even more intriguing, as the direction of trade from this sector is from Ireland to the USA, with a large trade deficit for America in the merchandise trade statistics for pharmaceutical exports. The Irish resident pharma industry (the great majority of it American owned) is exporting back to its homeland.

Why might it do that, one might ask? Indeed, it appears that President Trump and his colleagues in the pre inaugural Transition Team asked just that in private dinners and meetings between the President and leading corporate multinational taxpayers in Ireland, the pharma industry, including the global CEOs of Pfizer, Eli Lilly and Apple.

This was personally related by President Trump in a lengthy press conference he gave in January in Mar-a-Lago, Florida.

When it comes to pharma, as President Trump related it, the story from them appears to have been that tariffs on their imports would raise costs in the US. As to why they are coming from Ireland the reality is that Ireland’s low tax rate is actually making drugs cheaper in the US at the point of entry. When they were asked why were drugs so costly in the US (the main focus of concern from the Trump Transition team, including the prospective new health secretary Robert F Kennedy Jnr), the ‘middleman’ was identified as the significant source of the problem of the United States’ health system’s high domestic drug prices. High Irish corporate taxes were not mentioned in the President’s narrative.

The Transactional Nature of Ireland’s Balance of Payments position
Ireland’s international wealth position is not imperial, as befits its historical status as a colony. It is more like that of a modern city state, like Venice, historically, the Hanseatic States, and cities, known as an ‘Entrepots’. The picture is developed by considering other Entrepots, such as Amsterdam, Barcelona, Cadiz, Constantinople, Copenhagen, Gothenburg.

In economic history, it was sail power, and merchant shipping that were the foundations of the Entrepot economies. In the modern era that has been supplemented by aviation, a jewel in the crown of the modern Irish economy.

Certainly then, as an open economy dependent not alone on free flowing international trade, and benefiting from the gains from trade that free trade makes available to all participants in the transaction, Ireland has a strong vested interest in the avoidance of an international trade war, manifested by an outbreak of tit-for-tat tariff actions.

This is in the objective interest of Ireland as its economy is particularly dependent on free trade, and has been, ever since the inward looking policy of autarky and tariffs followed in Ireland in the 1930s and 40s was abandoned in the 1950s.

A trade war, which would involve the EU batting for Ireland, as the EU, like NATO acts on behalf of its members, would include Ireland as a participant, along with the 26 other EU member states. There is a certain ‘safety in numbers’ here as generalised trade tariffs raised against 27 individual states would involve much more complex consideration, all the more so if complex supply chains, as is the case for example in pharma or med tech value chains, were to be involved.

Thus the good news on the trade war front is that it will be far more difficult for it to happen in areas where there are complex supply chains involved, as is the case in most areas of Irish trade. This hope also stems from the possibility that the US administration tends not to philosophically believe in tariffs as a principle of economic policy. After all, tariffs are taxes, and Republicans don’t believe in high taxes. Free trade, like free speech is a fundamental tenet of American republican philosophy, and indeed of American conservative philosophy.

So why the mismatch with President Trump’s advocacy of it, of McKinley’s policy on tariffs, and indeed his own rhetoric about the ‘beauty’ of the word?

The answer may lie in a statement about this by President Trump’s first Commerce Secretary in the 2016-2020 administration, Wilbur Ross, the ‘king of bankruptcy’, who helped the President avoid bankruptcy proceedings in the 1990s (and who went on to make a lot of money from his role in the post-GFC rescue of Bank of Ireland).

Quoted in Finance Dublin last November Ross said tariffs were tactical: “Everybody talks about tariffs as the first thing. Tariffs are the last thing. Tariffs are part of the negotiation. The real trick is going to be to increase American exports. Get rid of some of the tariff and non- tariff barriers to American exports”.On first appearances, this already is being played out, the first notable example being the postponement of a threatened tariff of 25% on Mexico, to start in February 2025, cancelled within hours of its announcement on the basis of a promise by the President of Mexico to move 10,000 troops to help police the US-Mexico border.

A trade and foreign policy strategy for Ireland, and indeed the EU, based on this understanding would seek to make counter-offers in response to US initiatives, just as the Mexican president did.

When seeking a counter proposal strategy, the agenda could, and should be widened, beyond pure trade in commodities and manufactured goods (merchandise trade) to services. As the Irish balance of payments data show, these services areas are very substantial, notably in financial services and other business services sectors. A large balancing item in the Irish accounts are royalty and licence payments, other areas where credit can be taken by an Irish administration wishing to demonstrate the inward-side benefits to the US balance of payments offsetting merchandise trade deficits.

The dominance of items such as these, rather than the more traditional dividend flows and flows associated with the asset management industry’s retail products for Irish residents underlines the transactional character of the Irish balance of payments position in 2025, dominated as it is by transactions associated with large global corporate players. In that light, a detailed assessment of the nature of the Capital Account of the Irish balance of payments with the United States and indeed the world at large is warranted as a matter of urgency.

The strategic possibilities.
A welcome counterpart of balance of payments surpluses, and indeed Exchequer surpluses can be the gradual evolution in the financial profile of nations. This is certainly the case with the modern Irish economy over the past three or four decades. One sign of this sea change is the (re)-establishment by Ireland of a sovereign wealth fund, under the aegis of the NTMA. It is ironic that, as one of the 200+ Executive Actions signed by the new US President was an order to establish a American sovereign wealth fund for the first time.

Consistent with this changing profile, an exploration in Ireland of the implications will be a fruitful area of research.

This would point to the need for a prioritisation of outward investment and trade opportunities in the coming years, while not neglecting FDI.
While inward FDI, and export trade expansion in both goods and services should rightly remain top priorities for Irish inward focussed FDI promotional agencies such as IDA Ireland, the time has come for a proportional adjustment in focus.

This change in focus indeed appears to be reflected in the commentary of various Irish Government ministers over the year end emphasising the amount of Irish-originated FDI in the United States with over 100,000 US people cited as being employed in Irish-owned US companies.

Ardagh, CRH, Smurfit Kappa, and Flutter are significant such enterprises, for example.

Consistent with this there could be short term promotional, and concept/image shifting initiatives that could effectively engage the imagination of the US Administration, not least the President himself. He, in the first weeks of his presidency has come across as every bit as enthusiastic about the promotion of inward investment into the United States, as any Irish Taoiseach has been about promoting inward investment into Ireland.
A series of announcements involving both trade, US export promotion, and potential investment initiatives by Ireland could advance the positive FDI agenda of the Irish Government, and complement the promotion of Irish interests in the reciprocal areas of trade and corporation tax.

Possible examples might include: In the trade area, announcements of a coordinated Irish programme to facilitate the purchase of US manufactured aircraft, notably by Boeing.

Ryanair is Boeing’s single largest European customer, and the leading commercial airline platform for the US aircraft manufacturer in Europe.

A number of Irish headquartered aircraft leasing companies are purchasers of Boeing aircraft also, and the establishment of a State-led agency operation to facilitate this could reap results.

The United States has long maintained EXIM, the Export-Import Bank of the United States, its official export credit agency, one of whose major sectors of operation has historically been the support of the export of US manufactured aircraft.

An Irish agency, perhaps operated within the aegis of the NTMA or ISIF and the sovereign wealth fund are Government led initiatives that could be examined with aviation being a big sectoral element.

A widening of the ISIF Mandate to include overseas investment would also be consistent with the forecasted surpluses on the BOP account of coming years, and would, arguably strengthen the prudential profile of the fund, given that it would represent a diversification of assets.

Broadly across the International Financial Services sectors generally there will be scope to encourage the reach of the US FS industry in Europe, the Funds & Asset Management industry being a prime example. The “Funds Sector 2023” Report, published as a last act of the outgoing Government in October lays a framework for this work to be rolled out, its principal author having been appointed as the new Head of IFS in the Department over the year end (see article page 4).

Possibilities exist also in the area of public procurement for headline grabbing actions and announcements.
Another example is in the defence expenditure area. Ireland’s defence expenditure, even with a policy of military neutrality, is rock bottom in international terms, coming in, for 2023, at a 0.2% spend on defence as a percentage of GDP.

The new Irish Programme for Government envisages an increase in defence appropriations, the proposed East Coast naval base and enhanced sonar surveillance capabilities being examples. There could be within this budgetary framework the opportunity to expand Irish defence expenditure (on imports of military, naval and air equipment). Inclusion of US defence suppliers on this shopping list is an option for Irish ministers wishing to court reciprocation in Washington.

An Irish foreign policy fly in the ointment
There is a problem for Ireland in this new global foreign trade environment, the Occupied Territories Bill, which may have been stalled in the Oireachtas (Irish Houses of Parliament) following the election of a new Government. If enacted, this would introduce an extra territorial piece of legislation that would establish a special trade protocol around the Irish economy that would ring fence it as a special case. Lawyers and legal advice cannot find a way around this, while maintaining Irish legislation that derogates such trade related powers to the EU. That unique set of conditions would make Ireland a special case in the global trade arena, not an advantageous development from an overall FDI perspective.

The likelihood that this proposal will be abandoned, despite the strong Opposition enthusiasm for it, is bolstered by the argument that its potential economic impact would mean nothing in real trade terms. It is of course big in principle to its proponents, given there are irreconcilable views, passions, and opinions arranged around it, not least the age old passions and atrocities of the Middle East, the Holocaust, the atrocities of October 2023, and the regrettable war between Israel and Hamas.

The ongoing controversy around this Bill however is dangerous for Ireland for two reasons. It could potentially affect all FDI in Ireland, both in place and prospective, by undermining the country’s standing as a jurisdiction that checks all the EU boxes as a haven for FDI availing of general EU trade protocols.

It is also dangerous because of the potential for it to facilitate a portrayal of the Irish Government as anti Semitic, a charge already made by Israeli spokespersons in the context of the closure of its embassy in Dublin, a virtually unprecedented act by any country in the history of the Irish Republic.

Clearly the US, and the new US administration have close ties and affinities to Israel, and therefore there is a every chance that a continued war of words between the most senior Irish politicians (starting with the President) and the Israeli Government will continue to attract unwanted publicity for Ireland around this issue.

The path of prudence lies, at foreign policy level, of an explicit adoption of a foreign policy philosophy that explicitly incorporates an “Interests based” foreign policy, alongside any ambitions to project (moral) values.

The Department of Irish Foreign Affairs of Ireland has a headline statement on the Homepage of its website, entitled ‘International priorities’. It says:

“Ireland plays an active role in the world and we make valuable contributions to international affairs through our involvement in multilateral organisations and initiatives.

“At the heart of our efforts abroad is our simple mission: to promote and protect the values, interests and economic wellbeing of Ireland and its people”.

This reference to “interests and economic wellbeing” speaks for itself. The reference to “values” also introduces an ethical element, and as such this statement of policy recognises an Irish acceptance of both sides of the academic debate that exists around Western countries’ choices between “values-based” or “non-values-based” foreign policies.

However, it follows that when the interests of the country, and its citizens are put in jeopardy as a result of ‘morals’ based policy actions, there needs to be a fully informed debate about the implications of such a policy in the political sphere. The Occupied Territories Bill is a case in point, and a development that comes at an inopportune moment as the newly formed Government looks to govern in the context of a changed international political environment over the next five years.

Corporation Tax revenues and trade - a benign scenario for Ireland is possible
The reference in the Dept. of Foreign Affairs website to Ireland’s involvement and participation in multilateral organisations is consistent also with the country’s long status as an outward looking country with a small, open economy.

In global tax matters, the OECD, first established as an initiative of the post World War II US-led “Marshall Plan”, has gradually and steadily increased its role as a forum for multilateral tax agreements in recent years.

Memorably, Ireland and the US itself established an agreement, negotiated between Irish Finance Minister Paschal Donohoe, and former US Treasury Secretary Janet Yellen that provided the effective acceptance that led to the unprecedented signing of the OECD’s “Global Tax Deal”, in July 2021.

This however has yet to be legislated for in the US Congress, and ahead of that, the new President has issued an Executive Order that raises the possibility of the US withdrawing from it, and at least re-negotiating it.

Taxes, tariffs and economic policies, and the consequent legislation drawn up around them, will always be fluid and subject to change. The deal signed with Yellen for Ireland back in 2021 did nevertheless give Ireland an unprecedented advantage in the corporation tax sphere since that time - a degree of certainty that Ireland’s ordinal ranking in the table of international corporation tax rates (of 15% for big multinationals - 12.5% for smaller firms) would be set in stone for some time.

Now, as it turns out that may have been just for 4 years, given President Trump’s new Executive Order (for more on this see this month’s Irish Tax Monitor, on page 26). However, it may be for longer, depending on what support eventually emerges from the combined US legislature, including Congress as a whole, in addition to the Executive arm in the White House.

Whatever happens, and whatever happens regarding the future of the “Global Tax Deal”, Ireland’s corporation tax status at the lowest rung of the global corporation tax ladder can remain secure as long as an Irish Government continues to commit to it.

The maintenance of Irish tax sovereignty within the EU will be critical to this. As long as this can remain the case, the Irish position is secured.
The real threat to Irish corporation tax revenues will lie therefore not to the West, but to the East, from within the EU itself. In the short term, with the EPP and its allies securely in position in the European Parliament, allies of both of the Irish coalition parties, the medium term outlook, out to 2030 appears benign.