By Padraic Halpin and Maggie Fick
CARRIGTWOHILL, Ireland (Reuters) – As U.S. President Donald Trump takes aim at the mostly American-owned pharmaceutical factories that dot the Irish countryside, the people of Carrigtwohill are getting nervous.
A cluster of high-tech plants offering well-paid jobs – the product of Dublin’s strategy of attracting multinationals with generous corporate tax policies – has transformed the southerly rural town, quadrupling its population in just two decades.
The pharmaceutical industry has an outsized presence in Ireland, employing about 2% of the workforce and generating tens of billions of euros in taxes for government coffers.
But if Trump has his way, the good times could be about to end. While pharmaceuticals were exempt from the sweeping duties he announced on Wednesday, a U.S. official said the president is planning separate tariffs targeting the pharma industry.
Pharmaceuticals accounted for 58 billion euros ($63 billion) of the 73 billion euros worth of products Ireland exported to the United States last year, a big contributor to the U.S. goods trade deficit with the European Union that has riled Trump.
“He is going to do fierce damage,” said retired butcher Anthony Barry, 73, at a charity event at Carrigtwohill’s community centre, where the tariff threat to the Irish economy dominated conversation.
“It’s just a worrying time,” he said, after one of the event’s organisers listed six family members who work at nearby U.S. pharmaceutical facilities.
Trump has repeatedly singled out Ireland for “luring away” U.S. pharma giants such as Johnson & Johnson and Pfizer with decades of low corporate tax rates.
U.S. Commerce Secretary Howard Lutnick has characterised Irish policy as a “scam” that Trump’s administration will end through tax changes and tariffs.
More than a dozen of the world’s biggest drugmakers have plants in Ireland, some decades-old. Many make medicines or active ingredients for the $630 billion U.S. market, the industry’s biggest.
Merck produces the world’s top-selling prescription medicine Keytruda for cancer near Dublin. AbbVie makes Botox shots in Westport, while Eli Lilly’s Kinsale site helps meet soaring U.S. demand for obesity drugs.
NO EXODUS
Trump’s demands to shift manufacturing to the United States have prompted several companies to ramp up investment there.
But industry sources have told Reuters that drugmakers are reluctant to break and rebuild global supply chains, of which Ireland is a linchpin, as doing so would be costly and complex.
“I wouldn’t see an exodus happening as a result of this, because of not just the track record (of pharma in Ireland) but the lack of certainty around what the alternative is,” said PwC Ireland’s lead advisor to pharmaceutical clients Harry Harrison.
While some were carrying out “very, very initial” scenario-planning around moving production, including the cost, tax and regulatory implications and supply chain impact, “I would expect to see largely what is here now remain here”, Harrison said.
Investment agency IDA Ireland has announced at least a dozen U.S. pharma investments of between $55 million and $1.8 billion since mid-2022, and its head of life sciences Rachel Shelly said there was no sign they would be paused.
Although Prime Minister Micheal Martin warned on Tuesday that further investment decisions are on hold, “in the immediate term, the uncertainty may cause companies to hold a little bit but those decisions can’t be put off forever”, Shelly said.
“LAST THING I WANT”
While foreign multinationals have long cut their tax bills by locating intellectual property (IP) in Ireland, the revenues that have rolled in have left the country with the healthiest public finances in Europe.
But the reliance on decisions made in U.S. boardrooms has left it especially vulnerable to Trump’s economic plans. Martin has called it the most serious challenge facing the country.
Research co-authored by the Irish finance ministry found that if permanent tariffs are introduced between the U.S. and EU, Ireland’s economy could be 1.8% smaller by 2032 than it otherwise would have been.
The drag on exports, employment and growth would curtail the recently re-elected government’s ambitious tax and spending plans, a hole that would deepen if U.S. corporate tax reforms led to production and IP returning to the U.S., the paper said.
Pharmaceutical companies employ about 50,000 people directly and thousands of shops and suppliers depend on highly paid multinational workers’ custom.
On Carrigtwohill’s outskirts, parents wearing pharmaceutical company IDs file in and out of Ireland’s largest childcare centre, located next to plants belonging to Merck, AbbVie, Gilead Sciences, GE HealthCare and Stryker.
Oliver Sheehan said many locals thought he and his wife were “mad” when they relocated their crèche to the business park 25 years ago. Now they look after 450 children, employ 88 staff and spent 3.5 million euros on a major expansion in 2019.
That growth mirrors Carrigtwohill, one of Ireland’s most diverse and youngest towns whose population has jumped to 5,500 over the last 20 years and is expected to double again by 2028.
Around 40% of Sheehan’s business comes from workers at the multinational companies, he says.
“We’re certainly not bulletproof. We have a business model that I feel we could overcome it, but it would certainly impact us.” Sheehan said of any potential hit from Trump’s tariffs to jobs and investment.
“It’s the last thing I want.”
($1 = 0.9245 euros)
(Editing by Catherine Evans)
