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Investing.com -- The Central Bank of Ireland has issued a warning that the country’s economy could face significant damage, potentially even a recession, if U.S. President Trump decides to impose higher tariffs or alter tax rules.
The bank made this statement on Wednesday, following a quarterly report in which it reduced its growth forecasts for the upcoming years.
The Central Bank has adjusted its expectations for gross domestic product (GDP) growth, now predicting a 4% increase in both 2025 and 2026. This is a decrease from its prior forecast of a 4.2% expansion this year and a 4.5% rise next year.
The bank cites uncertainty regarding the future actions of President Trump as the reason for this change, particularly in relation to the impact on investment and exports.
Robert Kelly, the director of economics at the Central Bank, highlighted that increased tariffs on imports from the European Union would further impede Irish economic growth. The extent of this impact, however, would be determined by the magnitude of the tariff increase and the specific products it would apply to.
Kelly did not dismiss the possibility of a recession resulting from a potential 25 percentage point hike in tariff rates, describing the impact as "significant".
The future of the Irish economy this year is closely tied to the U.S. pharmaceutical companies operating in Ireland. These companies have been a point of contention for President Trump, who expressed dissatisfaction with the current economic relationship between the two nations.
He noted a "massive deficit" with Ireland during a meeting with the country’s prime minister last week, expressing a desire to "even that out".
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