With the inauguration of Joe Biden, an ending of the four years of the highly debated Trump Administration begins. Many people are overjoyed with the change in power, but there is also some doubt. The main focus of Biden, as stated in his inauguration speech is to “restore the soul of America”, but what does that mean and entail for Ireland and our relationship with the US?
The effects of US government policies have long-lasting effects on the Ireland economy. Especially changes in corporate tax code on the US international companies that operate within our borders, employing nearly 160,000 people. These businesses are the case of nearly a €7 billion unforeseen fall of Irish corporation tax receipts over the last half-decade. The Trump administration was a strong advocate for tax reforms aimed to bring said organizations’ operations closer to home in the US. This included nearly a 10.5% charge on global low-taxed income, or otherwise known as the Gilti tax. The Gilti profits tax has been set far too low, and therefore did not discourage US companies to shift their operations to low-tax countries like Ireland. Biden proposes to double the Gilti profits tax to 21%, which would largely impact the willingness of US companies to maintain profitable operations and hiring in Ireland.
Other than tax laws, nearly 20% of all Irish exports are to the US, a portion being nearly €1 billion of drinks and food. This means that Ireland is extremely vulnerable to possible impositions of food tariffs, adding to a struggling relationship between the US and Europe in terms of trade. Biden aims to protect the interests of US industry workers from unfair competition internally, therefore the new administration can be seen as not a change of focus and opinion on this matter, but rather a change in tone.
Of the European countries, Ireland is unique for its amount of economic exposure to the Biden administration’s goals of limiting the power of Big tech companies such as Amazon, Apple, and Facebook. All these companies have large operations located in Ireland, and these companies have been made significantly weak by the new regulations in the US. The issue of limiting the big tech companies is a bipartisan issue in eh the US, however, Ireland is heavily impacted by these actions. These large companies include over 20,000 employees within Ireland’s borders and have formed a large part of the Irish market scene.
We can expect to see large changes in the relationship between Ireland and the US, as well as big changes within Ireland these upcoming months and years.
Lucas Zhang was a Finance major at Ohio State University. He writes about finance, mortgages, and technology for Irish Mortgage Brokers.