The next President of the United States doesn't want US jobs going anywhere...
Part of the Donald Trump's economic plan for the US should he win the presidential race was to dramatically reduce the rate of corporate tax from 35% to 15% as he seeks to stop American companies from moving their operations to foreign soil.
With the Republican candidate now named as the US President-elect, if that protectionist policy goes ahead, it will bring the rate extremely close to the 12.5% rate of corporation tax famously Ireland offers. With Republicans now controlling both the US Senate and House of Representatives, there are no obstacles from that coming to fruition.
So does that mean one of our country's big selling points to US investors will soon be redundant?
PwC's Feargal O'Rourke – who also sits on the board of the American Chamber of Commerce – said that while Trump is trying to "de-incentivise" firms from coming to the likes of Ireland, "we work in a global economy [and] US companies are always going to want to move companies abroad."
"For major things like research and development, for large-scale manufacturing plants, intuitively they should go back to the United States and that’s the type of behaviour he is trying to get", he noted, although the companies already in Ireland have "firmly-entrenched roots" that should hold.
O'Rourke also moved to remind people that he had run without the "monolithic backing of his party" which could serve to curb some of his more outlandish ideas.
"So you’ve got adults in the room like Paul Ryan, who for the last four or five years has been working on tax reform in the US in his previous role as Chairman of the [chief tax-writing] Ways and Means Committee. Even Paul Ryan was not proposing anything like a reduction that the Republicans were talking about. More like a reduction to 24%."
It also remains uncertain whether these proposed policies are absolutes or there is room for dialogue.
"Is he a deal-maker?" O'Rourke pondered. "He’s going to renegotiate a lot of the trade agreements? Are they opening positions that he’s going to negotiate from? But, in the mind of the people who voted for him, they are positions he now has to deliver on."
At the very least, O'Rourke believes that the election result will give US multinationals that were considering a move across the Atlantic pause before doing so.
"I still believe that it's very difficult to run a global business from California without having boots on the ground. A regional headquarters in the likes of a Singapore or the likes of a Dublin.
"So is it going to close it up completely? No, but it will bring a degree of uncertainty. Like we saw in the immediate months following Brexit, where companies say ‘let’s just hold off for a few months’.
"If you’re Martin Shanahan or the IDA today, you’re going to be saying your job has just got immeasurably difficult after tonight’s result."
What can the IDA do to respond?
"Here's the acid test now. We've always said – and I believe it to a huge extent – it's not all about the tax Ireland's offering. It's about a lot of other things; about talent, a pro-business environment, a way of doing business that is familiar to the US...
"It would effectively take our tax plank out of the offering for US multinationals. But I still believe there are many other planks in the offering and the fact that companies need to have a global footprint. It’s not going to be the end of the world. So I would say look, it will cause uncertainty, it will cause companies to revise their entire global strategy, but do I believe this is the end for Ireland as a home for US foreign direct investment? No I don’t."
If anything, other European countries should be even more concerned, O'Rourke argued.
"It puts the UK in a position now where they’re saying ‘gosh, we’re off the game’... They may have to come down to 15%. The Switzerlands, the Netherlands, it puts them off the game."