A MARTÍNEZ, HOST:
When President-elect Trump talks about tariffs and trade wars, you might think China, right? But his team is also taking aim at a much smaller economy, the one in Ireland. And that's where a lot of U.S. companies have offshore operations and pay lower corporate taxes. Now, that model has really enriched Ireland, but it's now under threat as Donald Trump tries to bring those companies and their profits back to America. NPR's Lauren Frayer joins us now from Dublin's docklands. That's an area that has been transformed by an influx of U.S. companies in recent years. So, Lauren, if Trump indeed imposes those tariffs and cuts the U.S. corporate tax rate, how does that come back to Ireland?
LAUREN FRAYER, BYLINE: So Ireland has Europe's biggest trade surplus with the U.S. That means it exports, sells to the U.S., way more than it imports, buys from the U.S. And Trump's nominee for commerce secretary, Howard Lutnick, has actually singled out Ireland, calling this trade surplus nonsense and saying that it's at the expense of Americans.
MARTÍNEZ: What exactly does Ireland export to the U.S.?
FRAYER: Yeah, it's not quite obvious, A. Like, you're probably not driving an Irish car. You're probably not using Irish appliances in your kitchen, for example. So I put that question to an economist here, Aidan Regan at University College Dublin. And he told me what Ireland sells to the U.S. is actually not Irish stuff at all.
AIDAN REGAN: It's not Irish butter, whiskey or wool jumpers. It's U.S. consumers buying U.S. drugs from U.S. companies that have their production and subsidiaries in the island of Ireland.
FRAYER: Let me explain what he means there. Take pharmaceutical companies for example. Merck, Pfizer, Eli Lilly, they all have operations here in Ireland. They're U.S. companies. Most of their sales and profits are in the U.S. and from the U.S, but they base some of their factories here in Ireland. They register some of their intellectual property here in Ireland. And that allows them to report some of their profits here rather than there and pay Irish corporate tax.
MARTÍNEZ: OK. I didn't even know there was an Irish car, Lauren. I'd actually test drive that just to feel it.
FRAYER: There is (laughter).
MARTÍNEZ: OK, now the tax rates. How do they compare?
FRAYER: So Ireland's corporate tax rate has been 12.5% in recent years, compared to 21% in the U.S. So you can see why companies might come here. It gives them access to the European Union's single market, some 450 or so million consumers, bigger market than the U.S. No tariffs between countries inside the EU. I'm standing in Dublin's docklands, as you mentioned, which used to be, 25 years ago or so, derelict. I'm looking out at glass and steel skyscrapers, PWC, Citi. I mean, these are all American companies, some of which employ - multinationals here employ 11% of Irish workers. And because of the tax they pay here, Irish GDP per capita is off the charts. It's more than $100,000 per person. You know, the Irish just had an election where literally every candidate was able to promise both spending and tax cuts because the government's just swimming in budget surpluses here.
MARTÍNEZ: Yeah, but all that can go away - right? - if Trump follows through on some of his proposals. So how are the Irish people feeling about that?
FRAYER: There's a lot of uncertainty. I asked a former Irish ambassador to Washington, Dan Mulhall. He was posted in Washington during the last Trump administration. And here's what he had to say.
DAN MULHALL: The whole world is having to recalibrate to deal with what is going to be an unpredictable year or two ahead. We probably are too dependent on multinational companies, foreign exports.
FRAYER: And he says Ireland is worried about losing this foreign investment for sure. It's also realizing that it may have put too many eggs in one basket with these big U.S. multinationals, and it may need to diversify its economy. But that's not going to happen overnight.
MARTÍNEZ: That's NPR's Lauren Frayer in Dublin. Thanks a lot.
FRAYER: You're welcome. Thank you.
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