New era of tariffs is a reality check for Ireland

How should we describe this move to bring back tariffs? The end of free trade, the death of globalisation, the collapse of our business model - it has been called all those things and to what extent it becomes any of them remains fully to be seen. But it is clear all these tariffs will bring change, and so we need to start thinking about what that will that mean for us.

One of the consequences I think will be the return of the political importance of making choices. In normal societies, this is what politics has always been about – making decisions about what, and who, to prioritise in public policy and in public spending. But for over a decade we have had enough money to do very little of that. Other countries have listened with astonishment to the many voices here who have told us that we are the worst country in the world. Many people outside Ireland – not just Donald J Trump – think we have been riding high on the hog. Our lack of self-awareness about that is quite something.

Now you could well argue that we did make some unpopular choices this last decade. The reason for a lot of the anger in our society comes back to one of those: the old got more of the pie and the young couldn’t get a house. That for sure was a choice we made. No wonder the young people are disaffected.

But in most other areas there have been no real hard choices. Our public income has ballooned, primarily because of corporation tax – which has grown at an astonishing rate – and the relatedly buoyant economy. That money washed away the need to decide between alternatives and to be clear what policy underpinned such decisions.

Cut taxes or increase public spending? No no no, we’ll do both! Save for a rainy day or splurge now? We’ll do both! And so, as any outsider can see, we have been merrily increasing our public spending at an enormous rate, while not paying a blind bit of heed as to where all the money comes from.

If the events of last week signal anything, it is the end of that politically surreal atmosphere. Hard choices, whether we like it or not, are coming back, and we will have to be much more focused on the reality of the big picture – and what we need to do to safeguard that reality.

Our business model has been to be a semi-detached outpost of the American economy, and we have done well on it because of our link to the European Single Market. We make our money from trade, supported by that operating environment. Fundamentally, it’s not much more complicated than that.

Most of the money that pays for most things in Ireland comes from that model. That money does a lot of good for everyone as well as – yes – make a small number of people very wealthy. But contrary to what you hear in so much of our public debate, the money does both of those things. It makes some rich, and it has made almost everyone better off. It has also allowed us to massively increase what we spend on those who most need help – though of course not always effectively.

And given that our link to the Single Market underpins how we make that money, how much focus have we put on preserving, protecting and supporting the European Union? What decisions have we made to support the institutions of the EU, much less to actually defend them, and our partners in it? In our general election campaign, what proportion of time was dedicated to how we make money, as opposed to how we spend it?

Now, we will have to start thinking about these things, because the threat to all that from the new regime of tariffs is obvious. It may be a big hit or it may be a slow burn, but either way, it is going to impact how we have done things these past years.

So in this new world of choice, what will this mean?

With the level of trade impacted, the public finances will get tighter. We will then have to make choices about which areas of public expenditure we prioritise, and we will have to learn that we can’t do everything we want in the way we have been doing it. That will mean we will not be able to try and solve as many problems with a subsidy or a state intervention. That should change the nature of many of our public debates where the first call in most of them is for a subsidy of some sort or another.

It goes wider than that. We will find that trade wars mean that not only are you fighting with the country putting the tariff on you, but that you have to make painful decisions about which of your own industries will be protected and which will disadvantaged as you fight back. We will have to work within the EU to try and protect those industries most important to us. That will mean compromises and it will mean that we will not always get our own way.

Given that operating within the EU is the only way to protect our main business model, we will have to take some pain as well as gain as we do that. Certain industries which lose out cannot be protected forever and so will have to change the way they do business or just simply do less business. That is the way of this tough new world. Trade benefits us, restrictions harm us. We will therefore also surely have to end the head scratching habit we have of opposing new trade deals the EU makes with other countries because some interest within the country objects to some aspect of it.

In international affairs, we will find we have choices and decisions to make about how we balance our national interests with our principles, as well as to meet our obligations to our neighbours and friends in the EU and in the UK. Solidarity is not always and only what others owe us, but a responsibility we share. We will need to recalibrate the anti-British feeling which became so widespread and so casually expressed across our country, now that we have a British government that we can actually do business with. That relationship is now more important than ever because of all the new complications the Trump tariffs throw up for the economy of this island, north and south.

These are just some of the harder choices ahead of us. To help us face up to them and indeed make them, we also really do need to raise the level of the debate around them. One practical way that we as citizens could do that is to get our heads out of phones. Social media is no place for a serious discussion. We need to find a way to listen to arguments and form judgements that are based on analysis and evidence, and not just on anger or emotion. Hard choices make for harder times, but perhaps they can – we hope – lead to a better, and slightly more real, debate.