Goodbody Stockbrokers have today observed that Ireland is much more than just a casual observer to today’s US election and the outcome could have very important implications for the economy over the coming years.
From a domestic Irish perspective, Goodbody say the most important policy differences relate to trade and corporate tax policy. Donald Trump’s trade platform over the past four years has been to aggressively use tariffs and the threat of tariffs to force an agenda in bilateral relations. China has been the main target in that battle over recent years, but similar battles, possibly culminating in additional trade wars, cannot be ruled out, even with historical allies such as the European Union.
Goodbody believe Biden would likely continue to take a hard-line towards China but would be more willing to use multilateral organisations like the WTO to adjudicate on disputes. For Ireland, Goodbody say any move towards further protectionism will hamper growth prospects given its high dependence on international trade as an engine of engine.
On tax policy, corporate tax reform was arguably Trump’s most important economic legacy of his first term. Goodbody feared that the reduction could curtail Ireland’s ability to entice US firms to set up operations in Ireland as they had done in previous years. This has not been the case (until the pandemic struck).
If he wins, Biden promises to reverse some of the corporate tax cuts, but is pledging to make it more difficult for US firms to minimise profits abroad, particularly in the area of Intellectual Property (IP), where Ireland has been a major recipient in recent years.
According to Goodbody Stockbrokers, "For us, access to the EU market remains the number one reason for US investment into Ireland. The UK would have been Ireland’s largest competitor for this investment, but the loss of full EU market access is likely to benefit Ireland in this competition. An open trade policy under Biden is likely to be a more favourable outcome for Ireland. His Irish roots would not hurt in the diplomatic relationship either. Let’s wait and see."
Source: www.businessworld.ie
