Ireland’s Profits From Weight-Loss Drugs Draw Trump’s Attention

(Bloomberg) – The artisan craft store places Jostolls in store with fish restaurants around Kinsale’s port on Ireland’s southwest coast. At the edge of town, Earth movers and concrete mixers work at construction sites for new homes.

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It is a long tourist destination, and Kinsale is booming. The main reason for the town’s vibrancy is on a 10-minute drive along the winding roads of Cork County. Eli Lilly & Co. It is here between rolling hills and lush farmlands that produce the active ingredients of the hugely hit Mounjaro and Zepbond medicines.

The US pharmaceutical giant employs more than 1,200 people on its vast campus, the size of an 18-hole golf course, creating demand for housing, school locations and local businesses throughout the region.

It’s a kind of development that President Donald Trump says the United States should not be allowed to happen.

“This beautiful island of 5 million people has an understanding of the entire US pharmaceutical industry,” Trump told me last week at a White House meeting with Ireland’s Prime Minister Michael Martin. While he said he “wanted nothing to hurt Ireland,” Trump insisted that trade relations must be based on “fairness.”

It sounds like a threat to a country where the economy is built and prosperous, based on its appeal to US multinationals. Ireland hosts its European headquarters, including Apple Inc., Salesforce Inc. and Intel Corp., helping the island nation acquire the largest trade surplus with the European Union, excluding Germany, with the US.

Ireland is particularly exposed to Trump’s trade tariffs.

“When it comes to exporting goods, there are a lot of global supply chains operating in Ireland,” said Loretta O’Sullivan, Chief Economist of Ireland. “The majority of them are pharma and therefore concern and exposure.”

Lily recently announced a $27 billion investment in the domestic US manufacturing industry due to possible tariffs. But the pain may already be coming to Ireland. Irish whiskey will hit if Trump follows the threat of a 200% tariff on alcoholic beverages from the EU. Meanwhile, the US has said it will apply mutual tariffs around the world from April 2nd.

Washington is still unprecedented for Ireland if it collects 10% of EU goods at the bottom edge of the spectrum, said Dan O’Brien, chief economist at the International Institute for European Affairs in Dublin.

“The impact on the Irish economy is strongly negative as it is far from Europe’s largest per capita goods exporter to the US,” O’Brien said. “The only real question is how much damage they do.”

The Irish government is responding with the attack on St. Patrick’s Day.

The visit of the White House Prime Minister, or Taoisiech, was merely an effort in a series of efforts to reach Irish civil servants to US policymakers around March 17, with a squad of government ministers deployed for engagements around the US.

This is a well-nourishing strategy of relying on the soft power of Ireland in the US and a massive diaspora.

“The relationship with Ireland goes back centuries with America,” former Ireland Prime Minister Leo Baradkar said in an interview. “It’s not about family connections, cultural, economic, and who’s in the White House at any given point.”

Still, it certainly helped that former resident “Mayo Joe” Biden is one of the most Irelandic presidents of the US, making a four-day return visit in 2023.

Trump is a different outlook. When Martin pointed out investments by US Irish companies at their meeting, Trump retorted, “The deficit is huge.”

“We want to make it as clean as possible,” he said.

According to estimates from the Bureau of Statistics, Ireland exported 72.6 billion euros of goods to the United States last year, up 34% in 2023. This results in a trade surplus of 50.1 billion euros.

Armed with speech points and data, the Minister has been prepared ahead of US travel to educate American counterparts on Ireland’s contribution to foreign direct investment in the US.

Mike Beary, former head of Amazon Web Services in Ireland, said:

Ireland was the first attractive place for international companies until the 1950s when tax incentives were reduced, dating back to the 1950s. The world’s first free trade zone was established in 1959 near Shannon Airport. In 1973, membership in the EU pioneer EEC granted tariff-free access to the European market. The 12.5% ​​corporate tax rate was even more temptation for US companies that helped to promote the “Celtic Tiger” year of the 2000s. It was followed by Google Inc., Facebook (now Meta Corp.) and Medical Devices Maker Boston Scientific Corp.

However, Ireland’s low tax regime has become the bone of competition with other EU states competing for the same business. In October, Apple was ordered by the EU Commission to pay Ireland a 13 billion euro tax after determining that Ireland had violated the state’s aid law by giving iPhone manufacturers an unfair advantage.

These benefits are now closed and the Irish government had quickly said that the ruling referred to past tax arrangements. Ireland has legislated the OECD’s 15% minimum corporate tax rate, but still benefits from windfall tax receipts, boasting a rare budget surplus.

Ireland’s good fortune is not noticed. US Secretary of Commerce Howard Lutnick singled it out for criticism, saying Ireland was running a budget surplus at the expense of the US.

Gabriel Mahlf, governor of Ireland’s central bank, warned in February that the downside to Ireland’s economic outlook is rising due to high levels of excessive exposure to widen global trade tensions. According to an analysis of Bloomberg Economics, Ireland is just behind Mexico and Vietnam, and is comparable to Germany in terms of trade surplus with the US.

There are other areas where friction may occur. Given its own battle for independence a century ago, Ireland historically supported the Palestinian cause, and in May it recognized the Palestinian province. They are also poised to pass a bill that could criminalize Israeli settlements and trade in occupied Palestinian territory. Both moves will become outliers in Europe and potential targets for Trump. Israel closed its embassy in Dublin in December.

Ireland is also in a crosshair of tensions over technical regulations. US Vice President JD Vance remembered the EU data protection regulations and denounced the “free speech” censorship block. With most of the major technology names being in Dublin, it is the Irish data protection regulator who is leading the case related to businesses from across the block.

These cross-currents of the transatlantic push-and-pull are the big names of Pharma and Technology, such as Pfizer, Johnson and Johnson, Apple and Merck & Company, are set to deploy in the Cork area, which has been founded in recent decades. Initially, they were fascinated by low corporate tax rates and other incentives, but now they have a huge footprint and a pipeline of talent.

Indianapolis-based Eli Lily chose Kinsale with a $800 million expansion to ensure a reliable supply of its products. The company has also announced a $1 billion expansion to its Limerick facility. The investment is part of what Lily officials say is the company’s most ambitious manufacturing expansion driven by unprecedented demand for injected weight loss and tilzepatide, the active ingredient in diabetic drugs.

Eli Lily CEO Dave Licks explained that he visited Ireland in September to announce the expansion before what Kinsale makes was sent to one of two more facilities in the US before he went to the US in the second step.

“Kinsale had a long history of chemical integration and had many well-trained people,” he said. “It was a logical place to do that expansion.”

Eli Lily connects with Cork’s schools and universities, encouraging more students to STEM subjects. It has a long-established relationship with University College Cork, funding three lectures, scholarships, doctoral degrees and prizes. Indiana and the Port of Cork have signed a partnership agreement to investigate the feasibility of express container transport services.

Eli Lily has been in Kinsale since 1978, said local politician Marie O’Sullivan is a local politician who runs a small cafe near the port, praised her involvement in the community. Given the extent of commitment built over the decades, it’s hard for her to imagine it not being rewinded.

The company “has left money in the area forever,” she said. “They are constant.”

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