By Chelsey Dulaney

The Irish prime minister is heading to the White House Wednesday, with a crystal bowl overflowing with green shamrock -- and a mission to protect his country's American-fueled economic boom from President Trump's tariff onslaught.

The yearly pilgrimage in honor of St. Patrick's Day comes at a tense time for Ireland. The tiny nation with deep connections to the U.S. is making a fortune off low-tax plays by American companies such as Pfizer and Apple.

It also has made Ireland among the most vulnerable to Trump's plan for tariffs on European Union goods. Ireland's goods trade deficit with the U.S. is the largest in Europe.

The celebrations, replete with green-colored fountains and bagpipers, provide a festive backdrop to high-stakes policy discussions. The Irish prime minister, Micheál Martin, is scheduled to meet Trump in the Oval Office after breakfast with Vice President JD Vance. The speaker of the House hosts a lunch, which usually includes pints of Guinness.

"Tariffs will be difficult for us. There's no point in saying otherwise, " Martin said recently. "We're a small, open economy. We depend on trade."

Trump has special ire for the EU, which he said last month was "formed in order to screw the United States." He has floated a painful mixture of tariffs on imports of European cars and other goods, and reciprocal tariffs that could target the EU's value-added tax and its levies on U.S. tech companies. The first round is expected to hit Wednesday, with 25% levies on global steel and aluminum imports set to go into effect.

Ireland is an enthusiastic member of the trade bloc. Martin's challenge will be to convince Trump that the economic relationship is mutually beneficial. He has a card up his sleeve: Trump owns a sprawling waterfront golf course in Doonbeg, County Clare.

"His beautiful golf club in Doonbeg is very close to his heart," Martin said before departing for the U.S.

Irish media has been filled with hang-wringing over the visit. Some feared the White House would snub the Irish delegation this year, with rumors swirling about a rift because of the government's outspoken criticism of Israel and a perceived bias toward Democrats. Irish media ran near-daily articles about the status of the White House invitation, which came finally in late February. (St. Patrick's Day isn't for another five days, when Congress is out of session.)

Secretary of State Marco Rubio raised the trade imbalance with his Irish counterpart on a call last week, according to a State Department readout. The Irish foreign minister disputed it was a topic of discussion, worrying some in Ireland the two sides are heading for a dust-up. The Oval Office confrontation between Trump and Ukrainian President Volodymyr Zelensky in February added to worries that this year's event could strike a more confrontational tone.

"There has been a frenzy around this year's visit, and there's good reason for that," said John Deasy, a former Irish politician who served as an envoy to the U.S. during Trump's first term. "Ireland does have a target on its back."

Martin traveled to Texas this week, where he met Gov. Greg Abbott, an effort to bolster ties with Trump Republicans.

"Republicans in Washington do perceive the Irish diplomatic corps as biased toward Democrats," said Deasy.

The U.S. trade deficit in goods with Ireland jumped to a record $87 billion last year, according to U.S. Census Bureau data, overtaking Germany, the EU's traditional export powerhouse. That is despite Ireland having a population of 5.4 million, versus Germany's nearly 85 million. Only China, Mexico and Vietnam have larger goods-trade imbalances with the U.S.

A surge in pharmaceutical imports is driving the deficit. U.S. companies are likely producing weight-loss drugs at Irish factories and sending them back home, said Brad Setser, a senior fellow at the Council on Foreign Relations.

Ireland's pharmaceutical exports to the U.S. rose 42% last year, to $50 billion, according to U.S. trade data. That's roughly equal to U.S. passenger vehicle imports from Mexico.

"It's just exploded," said Setser. "If you're looking for a sector where the U.S. runs a big trade deficit, it's an obvious target."

Trump has singled out pharmaceuticals as a potential target for sectoral tariffs. Alexander Valentin, senior economist at Oxford Economics, calculated Ireland's pharmaceutical output would drop by 12% if tariffs are levied on the sector at 25%.

Also likely to draw Trump's ire: Many large U.S. pharmaceutical companies report owing little to no tax on their U.S. operations despite making the bulk of their revenue there, according to Setser, thanks to tax setups in Ireland and places like Singapore.

A tax overhaul by Trump in his first term, meant to discourage tax dodging by U.S. companies, unintentionally renewed the flight of companies to Ireland. Trump cut the U.S. domestic corporate tax rate to 21% and imposed a minimum 10.5% rate on worldwide profits. But the lower rate on income from abroad, along with favorable Irish rules around intellectual property, encouraged some companies to move even more business to Ireland.

The shifting of IP has caused huge distortions to Ireland's economic data, a phenomenon known as "Leprechaun economics." It also leads to quirks in the U.S. data: The largest trade partner of Indiana -- where drugmaker Eli Lilly is based -- is Ireland.

The activity isn't all on paper. U.S. companies directly employ 211,000 people in Ireland, according to the American Chamber of Commerce Ireland.

The Irish government's revenues have also soared. In recent years, foreign-owned companies have contributed more than 80% of Ireland's corporate tax take, according to the government's revenue department.

Tariffs or a further cut in the U.S. tax rate could encourage U.S. companies to book more of their profits in America, a blow to the Irish treasury, said Gerard Brady, chief economist at the Irish business lobby group Ibec. But he doesn't expect U.S. companies to abandon the Irish operations they have spent years building.

"Those sites take 10 years to build and get regulated and up and running. They wouldn't be easy to move," he said. "And without them being here, you wouldn't have the level of profitability which feeds back to U.S. shareholders."

Trump's steady barrage of trade threats has sparked a diplomatic frenzy in Washington. Canada and Mexico's leaders struggled to secure direct calls with Trump as the deadline for tariffs on their goods neared, The Wall Street Journal reported.

Ireland is unique among nations to have "a day penciled into the diary of the U.S. president every year," said Daniel Mulhall, Irish ambassador in Washington from 2017 to 2022. "I can't count the number of times my European colleagues said to me: 'How did you manage to have this annual celebration of Irishness in America?'"

Write to Chelsey Dulaney at chelsey.dulaney@wsj.com

(END) Dow Jones Newswires

March 11, 2025 23:00 ET (03:00 GMT)

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