Donald Trump’s election has increased the risk of a transatlantic trade shock but is not likely to trigger an exodus of US companies from Ireland, the Taoiseach has said.

Simon Harris said his Government’s decision to set aside billions of euros in longer-term funds would ensure a “buffer” was in place to absorb any negative consequences on the Irish economy if Mr Trump adopts more protectionist trade policies, such as the imposition of tariffs on imports or the lowering of corporation tax rates in the US.

Ireland currently receives billions of euros in tax receipts annually from US companies that have set up bases in the state due, in large part, to its favourable business tax regime.

Mr Harris was asked about the potential ramifications for Ireland’s economy as he spoke to reporters in Budapest, Hungary at a meeting of the European Political Community.

“President Trump has won the election of the United States decisively and obviously the European Union and Ireland will now work with the democratically elected president-elect of the United States,” he said.

Mr Harris, who said he hopes to personally congratulate the president-elect in a phone call, said Europe and Ireland have experience working with a Trump administration.

We do need to be aware that the risk of a transatlantic trade shock has now increased. I think that is a statement of fact

“I think it’s now important that in the days, weeks and months ahead we assess what President Trump may do versus the various policies that he has outlined,” he said.

“I think also President Trump is a businessman. He is somewhat transactional and I think he will understand that the relationship in terms of trade is a two-way relationship.

“It’s a relationship in terms of jobs – it’s now a two-way relationship. And whilst there are many, many jobs in Ireland as a result of US foreign direct investments, there are also now Irish jobs from Irish-owned companies in every single state in the United States of America.

“I think the purpose of today’s meeting is to begin to assess the outcome of the US election – US elections are always consequential beyond their own borders – and to see how we can best prepare to deal with the new administration.

“I would make the broader point that one of the very reasons we have run budget surpluses, one of the very reasons we have put money aside into funds to protect for the future, is to make sure that if there is any shock to the Irish economy in the years ahead, or to the European economy or any sort of transatlantic trade shock, that actually there is a buffer in place in the Irish economy. I think that’s really important.

“We’ve been often excoriated as a government, and my own political party (Fine Gael), for making those decisions by political opponents. I think those decisions seem even more wise today than they did last week.”

Asked if he anticipated a massive exodus of US multinational companies from the Irish market, he replied: “I don’t, and we obviously need to continue to monitor all of this closely.

“And we do need to be aware that the risk of a transatlantic trade shock has now increased. I think that is a statement of fact.

“But we need to work our way through all of these things. We need to engage with the new administration at a European level, because, of course, trade is at an EU level.

“But companies locate in countries for many reasons, not just tax and, at the end of the day, and I think President Trump will understand this as a businessman too, the European Union is a major market.

“It is a major market and a major opportunity for the US to do business with the EU and for the EU to do business with the United States.

“And Ireland has always offered not just a competitive tax offering and not just worked at a global level in terms of settling those tax issues in terms of rates, but we’ve also offered talent, we’ve also offered access to the European Union, we’ve also offered being a country that can bridge the Atlantic in terms of the US and the EU, and a country that has been a gateway into the massive market that is the European Union.

“And I think all of those things remain a reality after the outcome of the presidential election.”

Mr Harris was also asked about the potential security implications of a Trump presidency and whether European nations need to invest more in defence, particularly in regard to support for Ukraine in the context of possible cuts to US support for the war-torn nation.

“The Irish position of military neutrality is not up for discussion, there are no plans to change Ireland’s military neutrality stance,” he said.

“But you can say that and also say the next thing – that Ireland does, of course, need to be aware that we’re not immune to the risks that exist in Europe, into threats that exist, including cyber threats.”

Just because you're militarily neutral, it doesn't mean that you're immune from those risks

Mr Harris said there is a need for Ireland to “invest more in defence and in working on security”.

“Just because you’re militarily neutral, it doesn’t mean that you’re immune from those risks,” he added.

“I think, in relation to Ukraine more broadly, and I look forward to seeing President (Volodymyr) Zelensky (on Thursday), Europe has to stand with Ukraine for as long as it takes.

“We cannot have a situation where a country can, through aggression, through illegal war, annexe people’s territories. And, you know, there’s been a lot of good work done in terms of the peace summit in Switzerland, which I attended, and other meetings to try and chart a way forward to bring peace to Ukraine.

“But that has to be grounded in the principles of the UN Charter. And I look forward to having an opportunity to really take stock today with around 39 leaders from across the European Union and the broader EU family, including the British prime minister (Sir Keir Starmer), on these issues.”