

Ireland between giants: Dublin’s strategy for surviving US-China tensions
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Ireland finds itself navigating a delicate balance between its deep economic alignment with the United States and the strategic necessity of maintaining open channels with China. Excessive US pressure could inadvertently push Ireland closer to China. It is therefore crucial that policymakers in Washington recognize the broader strategic consequences of their approach toward smaller partners like Ireland in the US-China rivalry.
The interwoven nature of Ireland’s economic relationship with the US means that both US domestic and foreign policy could have substantial impact on Ireland’s economy. How this relationship evolves during Donald Trump’s second term will likely impact Ireland’s relationship with China, given that US–China tensions are likely to deteriorate under a hawkish Trump administration. Examining Ireland’s ties with the US and China reveals the limits of its claimed military neutrality and highlights how it might balance these relationships while preserving strategic autonomy.
The new trade war between the US and China may spill over into countries like Ireland where non-tariff retaliation could impact it. This matters because Ireland maintains broad-based economic relations with both China and the United States, encompassing bilateral trade in goods, cross-border trade in services, and reciprocal flows of inbound and outbound foreign direct investment.
Ireland–US relations: growing pressure from Trump’s tariffs and reshoring agenda
Ireland’s foreign direct investment (FDI)-driven economic model, heavily reliant on US multinationals, faces growing pressure from President Trump’s tariffs and reshoring agenda – making a pivot toward China as a potential alternative increasingly attractive option.
Traditionally, Dublin has enjoyed warm relations with Washington, irrespective of whether the administration was Republican or Democrat. Especially under President Joe Biden’s administration, the US and Ireland maintained close ties.
More recently, on 12 March 2025, the meeting between Taoiseach (Prime Minister) Micheál Martin and US President Donald Trump, highlighted Ireland’s effort to balance transatlanticism with EU strategic autonomy. The Taoiseach went to great efforts to stress the mutually beneficial two-way economic relationship between the two countries, emphasising Irish investment in the US, including major business activity by Ryanair, Glanbia, and others.1 The Irish side aimed to defend Ireland’s economic interests in light of US criticism over trade imbalances and pharmaceutical sector reliance on US multinationals.2
Martin’s underlining of the mutual benefits stood in stark contrast to Trump persistently portraying trade as a zero-sum scenario in which Ireland’s gains were US losses. Trump repeatedly mentioned the US trade deficit with Ireland and how Ireland was “taking” US pharmaceutical companies. Equally, Trump’s narrative positions the EU as unfairly exploiting the US economy, criticizing the EU’s role in decisions such as Apple’s tax dispute in Ireland, in which ironically the Irish government sided with the US multinational against the EU’s position.3 At the time of writing, President Trump has implemented a 10% baseline tariff onto the EU that applies to most imports.
Ireland recorded a EUR 50 billion goods surplus with the US in 2024, drawing criticism from the Trump administration. A key contributor is the practice of ‘phantom exports,’ which benefits US firms. Officially termed ‘goods for processing’ or ‘contract manufacturing,’ these are goods produced abroad under contract by Irish-registered firms – mostly in pharma and tech – which are recorded as Irish exports despite never passing through Ireland, with Apple’s iPhone being the most prominent example.4 While US firms benefit from Ireland’s low corporation tax rates, Ireland gains in tax revenue. This arrangement also distorts trade data: in 2024, EUR 92 billion in phantom exports – over a quarter of total merchandise exports – were recorded.5
Royalties and licensing fees paid to US companies are the single biggest contributor to Ireland’s service imports and are the primary reason Ireland runs such a large services trade deficit with the US. The overall trade balance (goods and services) with the US was a deficit of EUR 93 billion in 2024.6 When accounting for both goods and services, the substantial US services surplus with Ireland helps offset the Irish goods surplus with the US, resulting in a more balanced overall trade relationship.
Despite the overall relative balance in the trade relationship and benefit for US companies and interests, Trump’s critical rhetoric is already influencing major pharmaceutical companies like Eli Lilly and Pfizer, who are considering shifting production back to the US, potentially reducing their Irish operations.
On the tech front, the EU imposed Digital Markets Act (DMA) fines for the first time against Apple and Meta for violating tech sector competition rules in April. Taoiseach Martin has expressed Ireland’s opposition to proposals such as a new digital tax aimed at large US tech firms, which are heavily represented in Ireland and contribute significantly to the country’s corporation tax revenue. The White House stated that the DMA “will face scrutiny from the Administration”.7
Annual St. Patrick’s Day diplomatic blitz
Every year the Irish government leverages its international soft power of Ireland’s national day by sending the country’s most senior government members around the world to meet foreign leaders. This year the emphasis was on the US: Taoiseach Martin met President Trump at the White House, seven senior ministers travelled to various cities in the US, while one minister of state and the attorney general also visited the land of opportunity. In contrast, Ireland’s sole envoy to China was Minister for Housing, James Browne, showing a decreased level of prioritization compared to recent years. In previous years, the government sent higher-ranking ministers to Beijing during the annual diplomatic blitz.
Ireland–China relations: Chinese companies are doing well on the island
The Irish government is likely to test the waters with China, exploring potential opportunities ranging from increased agricultural exports to greater inbound Chinese investment.
China’s Foreign Minister Wang Yi visited Ireland in mid-February 2025, shortly after its new government formed, following a stop in the UK. Amid tensions over Ireland having voted to impose tariffs on Chinese EVs entering the single market and Beijing’s investigations into Irish dairy and EU pork sectors, visits from China’s leaders have come at better times in the Ireland-China relationship. As a militarily neutral, non-NATO country with strong US economic ties, Ireland remains a strategically important stop for Beijing – especially under Trump-era policy shifts.
Previously, the treatment of Chinese businesses in Ireland were of interest to Wang Yi, who in 2023 asked then Foreign Minister (now Taoiseach) Martin for Ireland to treat Chinese companies fairly. Seeing as some Chinese companies are doing so well, Wang may have been especially conscious to check on their treatment now. Temu’s Irish subsidiary, Whaleco Technology Limited, filed its first accounts in summer 2024, revealing EUR 693 million in revenue yielded by sales all over Europe from July 2022 to December 2023. The company reported pre-tax profits of approximately EUR 40 million in Ireland, paying just under EUR 5.5 million in corporation tax for the period.8
Shein, a competitor of Temu, reported that its Ireland-based subsidiary made EUR 7.68 billion in sales and nearly EUR 100 million in after-tax profit in 2023, more than doubling its earnings from the year before. The company also expanded its local workforce.9 Most EU-bound orders from Temu and Shein are shipped from China and avoid customs duties, contributing to a surge in low-value imports.10 However, both platforms are now facing increasing EU scrutiny – Shein over consumer protection standards and Temu under an ongoing Digital Services Act investigation – highlighting the regulatory risks that may accompany their rapid growth.11
Temu and Shein may soon face greater regulatory pressure in Europe, as signaled by the recent EUR 530 million fine imposed on TikTok by Irish regulators – an escalation in the EU’s scrutiny of Chinese digital platforms. In May 2025, Ireland’s Data Protection Commission (DPC) fined TikTok for violating EU data protection rules, citing unlawful transfers of user data to China and a lack of transparency. TikTok plans to appeal, arguing the decision overlooks major security reforms under its EUR 12 billion Project Clover, including independent oversight and data storage within Europe and the US. The DPC also noted some data had been stored in China, raising the possibility of further action and signaling broader challenges for Chinese tech firms in Europe.12
On the political side, Ireland has received a new PRC ambassador, Mr. Zhao Xiyuan, in November 2024. The new ambassador previously worked as a journalist and held diplomatic posts in several countries before his first ambassadorial role in Ireland.
In May, 2025, Chinese official Li Hongzhong visited Dublin on behalf of China’s legislature to reaffirm bilateral relations. He emphasized his legislature’s commitment to developing a legal framework for cooperation and called for deepened engagement in areas such as trade, science and technology.13 The visit comes as the US steps up efforts to pressure partners like Ireland to reduce economic ties with Beijing.
US–Ireland–China relations: lucrative trilateral relationship faced with risk of disruption
The new Irish government is seeking to maintain a balanced stance by avoiding the appearance of being too closely aligned with China while also engaging with the US administration under Donald Trump. But when it comes down to brass tacks, by 2022 US multinationals were responsible for around 75% of Ireland’s corporation tax revenue, with just three American firms contributing nearly 40% – on FDI, it’s clear on which side Ireland’s bread is buttered.14
Ireland has acted as a hub facilitating trade between the US and China in certain economic sectors over the past number of years. Intel, Pfizer and Wuxi Biologics are among others that operate within this trilateral relationship. US company Intel has produced chips at its front-end fabrication plant in Ireland and exported them to China. Pfizer has imported active pharmaceutical ingredients from China to produce medication to be exported to the US. Wuxi Biologics has produced the active ingredients for major US pharmaceutical companies based in Ireland that export to the US. As Ireland imports more from China, the number of dependencies it has on goods from China has increased.18
In recent years, this trilateral relationship is being disrupted by both US and Chinese actions. The export of semiconductor chips from Ireland continues to decline due to Washington’s and Beijing’s respective policies amid growing tensions between the two.16 Recently, the Cybersecurity Association of China has called for Intel products sold in the country to undergo a security assessment.17 From 2022 to 2023, the total value of Ireland’s exports to China and the percentage share of integrated circuits as a total of Ireland’s exports to China dropped dramatically and has remained at a lower level since. Partly as a result, Intel is planning to cut 20% of its global workforce.
More recently, after investing heavily in Ireland over the past few years, Wuxi has sold its vaccine manufacturing facility to US–German company Merck & Co (MSD) for EUR 500 million,18 an action potentially linked to the legislation of the Biosecure Act which explicitly mentions Wuxi Biologics.
Since courting Wuxi to Ireland’s shores back in 2018, Ireland sought to de-risk its relations with China.19 President Michael D. Higgins signed a foreign direct investment screening mechanism into law in October 2023.20 Originally introduced as a regulation by the EU in 2019, after repeated delays, the mechanism came into operation in early 2025.
An early test for the mechanism comes in the form of a Chinese mining and battery production company taking full control over a lithium mine in Ireland.21 Ganfeng Lithium’s EUR 1.4 million transaction does not meet the minimum requirement for a notifiable transaction to the Irish government, however “ownership of, or influence over, sensitive businesses and assets” falls within the competency scope of Ireland’s FDI screening mechanism.
Three weeks after Ireland’s FDI mechanism came into force, the European Commission published a proposal to revise said regulation to make the investment screening mechanisms of EU Member States more effective by further harmonizing them and closing loopholes such as indirect foreign investments.22
These revisions and the potential for the screening of greenfield investments23 appear to be next on the EU’s agenda for the mechanism. This would have a major impact on the Irish FDI economic model and in particular on the IDA whose job is to lure foreign companies to set up shop on the Emerald Isle. It would also alter the barriers to entry, and the cost-benefit analysis may no longer add up for prospective investors.
Testing the bounds of Ireland’s military neutrality amid US-China rivalry
Ireland’s defence and security policy is undergoing its most substantial change in decades, as evidenced by the Defence Forces chief taking over as chair of the EU Military Committee, the selection of the country’s first military radar system, and the government’s planned acquisition of combat jets.24 All of this is accompanied by careful messaging that Ireland remains committed to military neutrality and a peace- centered foreign policy – yet the actions themselves increasingly call that narrative into question.
Russia’s invasion of Ukraine, the Russia–China nexus and now the US–Russia rapprochement has jolted Ireland to act and the EU into a defence spending frenzy. Ireland’s military neutrality is particularly sensitive amid EU militarization trends. Ireland traditionally maintains a militarily neutral status, anchored in the “triple lock” mechanism requiring UN approval, Irish parliamentary consent, and governmental decision before deploying military forces abroad.
A principal argument for abolishing the “triple lock” is that China and Russia – as permanent members of the UN Security Council (the ‘P-5’) – can block any Council resolution under Chapter VII that would authorize Ireland to deploy more than twelve peacekeepers abroad. Critics warn that P-5 vetoes pose an existential threat to significant Irish deployments, whereas proponents point out that General Assembly Emergency Special Sessions under Resolution 377 (V) (‘Uniting for Peace’) have in practice provided the de facto authorization to send peacekeepers when the Security Council is deadlocked.25
The current government is considering a bill to move outside of UN authorisation, whereby any mission involving the Irish Defence Forces is organised by a regional organization, such as the EU, in accordance with the aims and spirit of the UN Charter.26 In a poll on Ireland’s military neutrality published in January 2025, 75% of respondents supported maintaining the current militarily neutral policy, while 17% opposed it and 7% were unsure.27 Some fear that increased EU militarization could pressure Ireland into weakening or abandoning neutrality, compromising its independent foreign policy stance and undermining public support for neutrality.28
While the EU is not a defence union,29 its call – alongside that of the US30 – for increased defence spending carries weight, particularly in areas such as the protection of subsea cables. However, this pressure could push Ireland to divert more funds toward military budgets. That, in turn, might reduce the resources available for social infrastructure, public services, and welfare programs – issues that resonate strongly within Irish public discourse. Ireland needs to be able to protect its air, land, sea and cyber domains, yet this potential trade-off between military and social expenditures could exacerbate socioeconomic inequalities,31 a security risk in and of itself.
Conclusion: Hooked on the US, hedging on China
Ireland’s overwhelming economic reliance on the US implies two things: first, it is clearly more aligned with Washington than with Beijing; second, that very dependence also compels caution, as Ireland cannot afford to disengage from China.
For Ireland, which is debating its military neutrality and facing pressure to increase defence spending, balancing relations with both Washington and Beijing is becoming more difficult – especially amid domestic challenges like a severe housing crisis, cost- of-living concerns and rising anti-immigrant sentiment. At the same time, excessive US pressure or punitive measures could inadvertently push Ireland closer to China.
The US has competing objectives towards Ireland. On the one hand, it wants to reshore US pharmaceutical companies’ operations to improve its own economy, while on the other it wants Ireland to reduce its ties with China, part of a broader geopolitical strategy. Implementing one goal has an adverse impact on the other. It doesn’t work both ways.
- Endnotes
1 | The Irish Times.Micheál Martin Meets Donald Trump in Washington: How the Day Progressed. The Irish Times. 12 March 2025. https://www.irishtimes.com/politics/2025/03/12/micheal-martin-donald- trump-meeting-live-updates-ireland-washington/
2 | C. Thomas. Micheál Martin Says ‘Main Objective’ in Meeting Trump Was to Protect Economic Interests,. Business Post. 12 March 2025. https://www.businesspost.ie/politics/micheal-martin-says-main-objective- in-meeting-trump-was-to-protect-economic-interests-after-us-pre/
3 | The Parliament Magazine. Q+A: Inside the Apple Ruling: €13 Billion and a ‘Mess’ for EU Tax Law. 17 September 2024. https://www.theparliamentmagazine.eu/news/article/irelands-13-billion-windfall-has- the-eus-apple-ruling-unleashed-legal-chaos
4 | D. Murray. Phantom Exports Coming Back to Haunt Taoiseach Ahead of Trump Meeting. 9 March 2025. https://www.businesspost.ie/news/phantom-exports-coming-back-to-haunt-taoiseach-ahead-of- trump-meeting/; J. FitzGerald. A 145% US Tariff on China Will Hit Apple. and Ireland’s Corporation Tax. The Irish Times. 11 April 2025. https://www.irishtimes.com/business/economy/2025/04/11/a-125-us-tariff- on-china-will-hit-apple-and-irelands-corporation-tax/
5 | D. Murray. Here’s How Ireland Is Even More Exposed to Trump’s Trade War than You Think. Business Post. 2 April 2025. https://www.businesspost.ie/analysis/ireland-may-be-more-exposed-to-trumps-trade- war-than-we-think/
6 | The Irish Times. Ireland Has Large Trade Deficit with US, New CSO Figures Show. The Irish Times. March 6. 2025. https://www.irishtimes.com/business/2025/03/06/irish-economy-grew-more-than- estimated-in-2024/. The US-Ireland services trades surplus is directly related to the Ireland-US goods trade deficit; much of Ireland’s export trade is with Europe, while the imports related to that is with the US, this gives Ireland an overall trade deficit with the US.
7 | J. Keane. The EU Lobs €700m in Fines at Apple and Meta but Saves Most of Its Ammo, The Currency (blog). 23 April. 2025. https://thecurrency.news/articles/187329/the-eu-lobs-e700m-in-fines-at-apple-and- meta-but-saves-most-of-its-ammo/
8 | J. Keane. A Handful of Employees. Hundreds of Millions in Revenue: Behind the Scenes at Temu and Shein’s Dublin Face-Off. The Currency. 7 August 2024. https://thecurrency.news/articles/157899/a-handful- of-employees-hundreds-of-millions-in-revenue-behind-the-scenes-at-temu-and-sheins-dublin-face-off/
9 | H. Reid. Shein’s European Entity Reports 68% Sales Growth in 2023. Reuters. 4 November 2024. sec. Retail & Consumer. https://www.reuters.com/business/retail-consumer/sheins-european-entity-reports-68- sales-growth-2023-2024-11-04/
10 | DW. Why China’s Temu and Shein Are a Big Regulatory Headache. dw.com. 22 February 22 2025. https:// www.dw.com/en/temu-shein-chinas-low-price-platforms-are-a-big-headache-for-us-and-eu/a-71535422
11 | N. Lomas. Shein Hit with Consumer Protection Action in EU as Bloc Unboxes Strategy to Tackle Low- Cost e-Commerce Risks. TechCrunch (blog). 5. February 2025. https://techcrunch.com/2025/02/05/shein- hit-with-consumer-protection-action-in-eu-as-bloc-unboxes-strategy-to-tackle-low-cost-ecommerce-risks/; N. Lomas. Shein Gets More Questions from EU about DSA Compliance. TechCrunch (blog). 6 February 2025. https://techcrunch.com/2025/02/06/shein-gets-more-questions-from-eu-about-dsa-compliance/\\ uc0\\u8221{} {\\i{}TechCrunch} (blog
12 | Data Protection Commission. Irish Data Protection Commission Fines TikTok €530 Million and Orders Corrective Measures Following Inquiry into Transfers of EEA User Data to China. Data Protection Commission. 2 May 2025. https://www.dataprotection.ie/news-media/latest-news/irish-data-protection- commission-fines-tiktok-eu530-million-and-orders-corrective-measures-following; Christine Grahn. Our Response to the Irish Data Protection Commission Decision on Data Transfers. TikTok. May 2. 2025. https:// newsroom.tiktok.com; TikTok Fined 530 Million Euros by EU Regulator over Data Protection. Reuters. 2 May 2025. https://www.reuters.com/sustainability/boards-policy-regulation/tiktok-fined-530-million-euros-by- eu-regulator-over-data-protection-2025-05-02/
13 | People’s Daily. Li Hongzhong Leads a Delegation of the National People’s Congress to Visit Ireland
[CN]. 19 May 2025. http://cpc-app.people.cn/n1/2025/0519/c64094-40482478.html14 | Reuters. What Is Ireland’s Exposure to the US Economy and Trump’s Plans?. Reuters. March 11. 2025. https://www.reuters.com/en/what-is-irelands-exposure-us-economy-trumps-plans-2025-03-11/; European Commission. Fourth Annual Report on the Screening of Foreign Direct Investments into the Union. REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL. 17 October 2024). https://
eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52024DC046415 | Based on the MERICS Trade Dependency Database
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17 | Reuters. Intel Is a Security Risk for China. Says Influential Industry Group. CNN. 17 October 2024.
https://www.cnn.com/2024/10/16/tech/china-intel-security-review-intl-hnk/index.html18 | MSD Ireland in Deal to Buy WuXi Vaccines. Dundalk Site. 6 January 2025. https://www.rte.ie/news/
business/2025/0106/1489298-msd-ireland-in-deal-to-buy-wuxi-vaccines-dundalk-site/19 | M. Martin. RIA International Affairs Conference - Tánaiste’s Keynote Address. 2 May 2023. https://
www.gov.ie/en/speech/c6bc3-ria-international-affairs-conference-tanaistes-keynote-address/20 | Commencement of Screening of Third Country Transactions Act 2023. 18 December 2024. https:// enterprise.gov.ie/en/news-and-events/department-news/2024/december/20241218.html
21 | J. Keane. Chinese Mining Giant Ganfeng Is Taking Full Control of Irish Lithium Project. The Currency (blog). 11 April 2025. https://thecurrency.news/articles/185687/chinese-mining-giant-ganfeng-is-taking- full-control-of-irish-lithium-project/
22 | European Commission New Initiatives to Strengthen Economic Security. European Commission. 24 January 2025. https://ec.europa.eu/commission/presscorner/detail/en/ip_24_363; Revision of the EU FDI Screening Regulation: Is EU-Wide Investment Screening on the Way?. 29 January 2025. https://www. noerr.com/en/insights/competition-outlook-2025-revision-of-the-eu-fdi-screening-regulation-is-eu-wide- investment-screening-on-the-way
23 | European Parliament. Revision of the Foreign Direct Investment (FDI) Screening Regulation | Legislative Train Schedule. European Parliament. 20 February 2025. https://www.europarl.europa.eu/legislative-train/ theme-an-economy-that-works-for-people/file-revision-of-the-fdi-screening-regulation
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25 | Brigid Laffan, “Europe Is Rapidly Rearming. Will That Leave Neutral Ireland Defenceless?,” The Guardian, March 14, 2025, sec. Opinion, https://www.theguardian.com/commentisfree/2025/mar/14/ireland-neutral-europe-rearm-triple-lock-donald-trump; Niamh Ní Bhriain, “Saving the Triple Lock | Transnational Institute,” August 29, 2024, https://www.tni.org/en/publication/saving-the-triple-lock.
26 | How Did the ‘Triple Lock’ on Irish Troop Deployments Come into Being - and Why Is It Ending?. The Irish Times. 3 March 2025. https://www.irishtimes.com/ireland/2025/03/03/how-did-the-triple-lock-on-irish- troop-deployments-come-into-being-and-why-is-it-ending/
27 | N. Michael. Poll Shows Extensive Support for Ireland’s Neutrality. Irish Examiner. January 14. 2025.
https://www.irishexaminer.com/news/arid-41553730.html28 | L. Cullen. Ireland’s Neutrality under Threat: Why We Must Oppose EU Militarisation - Liz Cullen. DiEM25. 5 March 2025. https://diem25.org/irelands-neutrality-under-threat-why-we-must-oppose-eu- militarisation/”container-title”:”DiEM25”,”language”:”en-GB”,”title”:”Ireland’s neutrality under threat: Why we must oppose EU militarisation - Liz Cullen”,”title-short”:”Ireland’s neutrality under threat”,”URL”:”https:// diem25.org/irelands-neutrality-under-threat-why-we-must-oppose-eu-militarisation/”,”author”:[{“family”:”C ullen”,”given”:”Liz”}],”accessed”:{“date-parts”:[[“2025”,3,19]]},”issued”:{“date-parts”:[[“2025”,3,5]]}}}],”sche ma”:”https://github.com/citation-style-language/schema/raw/master/csl-citation.json”}
29 | European External Action Service. Article 42(7) TEU -The EU’s Mutual Assistance Clause. European External Action Service. October 2022. https://www.eeas.europa.eu/sites/default/files/documents/ Article%2042%287%29%20TEU%20-The%20EU%27s%20mutual%20assistance%20clause.pdf; Article 42.7 of the Lisbon treaty (the so-called Irish clause) allows neutral member states to refrain from providing military assistance to their partners.
30 | J. Fox. US Senator Calls on Ireland to Increase Defence Spending. 19 February 2025. https://www.rte. ie/news/ireland/2025/0219/1497521-us-senator-defence/
31 | G. Duval. Europe’s Military Build-Up: Will Social Spending Be Sacrificed?. 14 March 20 25. https://www.
socialeurope.eu/europes-military-build-up-will-social-spending-be-sacrifice