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Ireland offers one of the starkest examples of how US tariffs are impacting international trade flows.
Goods exports to the US slumped by 62% m/m in April. This dragged total exports down 39% on March.
The drop follows the significant 140% q/q surge in exports to the US in Q1 as firms front-ran tariffs.
Alongside an influx of investment in intangible assets, this pre-announcement export rush also accounted for a near 10% jump in GDP growth in the same period.
Much of April’s €16bn plunge in exports to the US – €12.8bn – was due to the collapse in medical and pharmaceutical exports, which remain exempt from tariffs.
Further confirmation that tariff front-running is unwinding is that industrial production fell 15.2% in April after strong growth in February and March.
We think goods exports and industrial production both have further to fall. Goods exports to the US remained elevated at €9.7bn in April, which is higher than the 2024 average of €6.1bn per month.
The added risks here are that the US administration ramps up talk of new tariffs, specifically on pharmaceuticals, which would also knock business and consumer confidence. Additionally, we could see a repeat of tariff front-running later this year if EU and US negotiators fail to reach a deal.
For now, we expect firms have stockpiled enough to prevent a repeat of Q1’s rapid rise in exports. Pharmaceuticals also have a limited shelf life, which makes front-running logistically challenging.
Ultimately, April’s collapse in exports will weigh on growth. We now expect the economy to contract in Q2, but still post modest expansion over the year.
