Let’s discuss Ireland, weight loss drugs, and other trade distortions.
I downloaded census data for 10 countries plus the EU as a hole for 2024 and through April of 2025.
My percentages comparisons come with a caution that the data is not seasonally adjusted so 4 months through April might not equal 33 percent of a year.
Yet, some things stand out, like Ireland which distorted the entirety of the EU by itself.
Trade Deficit Is Second to China
The US trade deficit with Ireland for all of 2024 was $87 billion. For the four months through April, the deficit is already $65 billion.
That’s second to China at $88 billion.
Drugs are in play.
How Weight-Loss Drugs Blew Out the U.S. Trade Deficit
The Wall Street Journal explains How Weight-Loss Drugs Blew Out the U.S. Trade Deficit
Planes have been jetting from Ireland to the U.S. this year carrying something more valuable than gold: $36 billion worth of hormones for popular obesity and diabetes drugs.
The frantic airlift of those ingredients—more than double what was imported from Ireland for all of last year—reflects the collision of two powerful forces: tariff-driven stockpiling and weight-loss drug demand.
The peptide- and protein-based hormones feed into a category of drugs that include wildly popular GLP-1 treatments and newer types of insulin known as analogues. Taken together the shipments weighed just 23,400 pounds, according to U.S. trade data, equivalent to the weight of less than four Tesla Cybertrucks.
Fit into temperature-controlled air-cargo containers, the pharmaceutical ingredients have had a huge impact on the U.S. trade imbalance. The shipments have propelled Ireland, a country of only 5.4 million people, to the second-largest goods-trade imbalance with the U.S., trailing only China. They accounted for roughly half of the $71 billion in goods the U.S. imported from the country in the first four months of the year. [Mish Note: My download feed says $65 billion, not $71 billion so weight loss drugs would be over half.]
Ireland is at the epicenter of the global rush. It is a major hub for U.S. drug giants, who have been expanding operations there in part because of Ireland’s favorable tax policies. Some of the bestselling drugs in the world, such as AbbVie’s anti-wrinkle treatment Botox and U.S. drugmaker Merck’s cancer treatment Keytruda, are made in the country.
The trade imbalance has put Ireland into an uncomfortable position, landing it earlier this month on the U.S. Treasury Department’s monitoring list for currency manipulation, which the government uses to send a warning shot to countries it thinks use unfair trade practices.
Ireland’s central bank said in a report Thursday that new factories making weight-loss drug ingredients helped drive the country’s exports. Ireland’s economy grew by nearly 10% in the first quarter compared with the end of last year thanks to the export surge.
Lilly is a force in the market for weight-loss drugs, with sales of its GLP-1 medicines Mounjaro and Zepbound expected to nearly double this year to about $30 billion, according to Bank of America analysts.
Merck produces cancer treatment Keytruda, the world’s bestselling drug, in Ireland, among other places. Merck Chief Executive Rob Davis in April said the company has enough supply to mitigate any impact this year from tariffs and is working on navigating the long-term fallout of tariffs.
Merck recently began construction on its first U.S. plant to make Keytruda. Lilly said earlier this year it plans to invest $27 billion in expanding U.S. production.
Other Distortions in the Data
Imports from China are down a bit more than one might expect in the absence of tariff front running.
The beneficiaries of that avoidance maneuver are Vietnam and India.
To the ire of Trump, apple is not going to manufacture the iPhone in the US. Instead it is turning to India.
Question of the Day
How Much Will an iPhone Cost with Trump’s Tariffs?
On April 7, I commented Sticker Shock: How Much Will an iPhone Cost with Trump’s Tariffs?
If consumers would pay $3,500 for an iPhone, we could bring production to the US.
You are economically brain dead to think it’s a good idea to produce literally everything in the US, but that is what Trump wants.
On May 23, I noted Trump Commands Apple to Make iPhones in the US or Pay 25 Percent Tariff
An increasingly erratic Trump is clueless about what it would take to move iPhones production to the US.
“I had a little problem with Tim Cook yesterday,” Trump said of his conversation. “He is building all over India. I don’t want you building in India.”
Also note that Movies Are Now a National Security Threat, 100 Percent Tariffs Announced
Hooray for Hollywood!
Yes, it’s really this stupid.
And on June 16, I commented After Trump Threatened Apple, His Sons Announce a Made-in-America Phone
Trump Mobile and a $499 “Glued-in-America” phone is coming in August.
The parts for the alleged “Made-in-America” T-Phone are almost entirely from Asia. Even Glued-In-America is highly unlikely, and certainly not for $499 if there is any semblance of quality.
Unlike phones, pharmaceuticals could easily be made in the US. The reason they aren’t is tax code.
A simple fix would set the tax code in the US at a lower rate than tax code overseas. Investment would return to the US in a hurry.
What Should Congress Do? Mish Top 12 Ideas
I mentioned 12 things congress should do on June 3 in Musk “Just Can’t Stand It Anymore”, Calls Spending Bill a “Disgusting Abomination”
Please check it out. Here’s a snip.
Proposal #8: Lower the corporate tax rate to 10 percent but make it 20 percent on income earned overseas. Some manufacturing will return to the US and all of the games played by drug manufacturers including the entire trade deficit with Ireland related to drug production (a massive $86 billion) would immediately return to the US.
Arianna Grande is what happens when you mix ozempic with narcissism and stupidity. Seriously, go have a look at her recent photos. She’s hopped species.
Who knew that all the people overweight and on diets, would save America?
Trump has been way worse than I expected. He’s telling a private business where they have to manufacture phones like he’s a dictator. Maybe we would have been better off with Kamala, horrible as she was.
Looking back now, I can’t really point to anything about Kamala that was horrible.
Fox ridiculed her “cackle” as if that mattered. People lapped it up. They also bought the whole “immigrants are eating our dogs and cats” so quite literally the voters are as stupid as they have ever been.
Her sub-100 IQ isn’t optimal.
you need an optometrist.
Y’all said Kamala would be a dictator and Biden would. Despite that, neither of those two attempted to control the means of production from the central government, only Dictator Trump did that.
What are you talking about?
DEI, Green legislature (EV mandates, net zero etc) is controlling the means of production every bit as much as demanding something be manufactured here.
Both parties influence the means of production via legislation / subsidies.
So telling private businesses who they have to hire via DEI or Green mandates (EVs, net zero etc) isn’t dictating things to businesses?
No matter who was elected the government was going to interfere with the private economy. Smart corporations planned for the possibility of either winning the election.
Ah yes, Kamala…
Higher income taxesHate-speech lawsDEI and Woke cultureMuch higher energy pricesOpen bordersForceful war escalation in UkraineUnrealized capital gains taxRe-writing of American history”Reparations” cultureetc. etc.
so that the American Trust-Fund kids can say to their Eurotrash pen pals “see? we’re civilized now”.
If you tax the weight loss drugs from Ireland, they will switch to exporting fitness equipment. The Irish very sneaky.
/s
No. They would go back to exporting people. There really isn’t much in Ireland. If the tax break goes away so will Ireland’s fake prosperity. They would be on the EU dole again.
Many, most countries, don’t have IP of their own. The Irish have beer and whiskey, at least.
Yep – people have always been their biggest export.
“There isn’t much in Ireland” Spoken like a xenophobic person who doesn’t look outside their zip code.
He is correct. Take away their foreign investment, and they’ll be on the EU dole.
I live in Europe and I have been there a few times so I know.
They have fantastic Golf Courses and golf culture!
Although you may have to bring your rain gear.
The Caddies take five minutes to get to the course, and three hours to get home.
Fantastic Pubs as well.
Although Trump’s Turnburry has some of the largest spiders you will ever find in a hotel room! Suggest Old Head or Adare Manor near Shannon…
Just Sayin!
>
It has folklore for tourists, beer and whiskey but little else. Sorry but the weather is horrible 90% of the time. The Irish who emigrated did well. Those who stayed much less well.
I stayed at Turnberry in 1990 when it was owned by British Rail. £35 a round I think it was. 15 minutes between T times, wonderful.
Wouldn’t it be far easier to collect taxes from businesses rather than individuals. I really don’t get it. Seems like a huge scam that has been beaten into us.
Businesses will pass the tax bill along to individuals through their prices. It may or may not be preferable, but, in the end, it’s always the individuals who foot the bill for tributes.
Almost all money ends up in businesses anyway. Get rid of the personal income tax and replace it with a corporate revenue tax.
A better way to punish Companies that make their goods off-shore: TAX INCOME of CEO’s and their EXECUTIVE STAFF PEOPLE at 75% of all income over $100.00 Annually and 95% of all INCOME DERIVED FROM BONUSES CALCULATED ON STOCK PRICE APPRECIATION.
This will end IMMEDIATELY.
They tried to do this in Europe.
Everyone just relocated to Monaco for tax purposes.
Grand Dad’s Dexatrim wasn’t the same one as today.
Agreed. Where are those lemon quaaludes from Wolf of Wall Street when u need them 🙂
I would gladly pay $3500 for a iPhone made in the U.S., if we could import all our politicians and bureaucrats from India!
Neither for me…
Lowering the corp tax rate from 21 to 10% will definitely fix the Ireland issue (12%).
But how much would that increase the deficit since all US corporations would be paying 10% and where would the US have to increase elsewhere to make up that revenue? Because I have to imagine the deficit would skyrocket if corporate taxes were cut in half due to revenue loss (far out weighting whatever you’d bring back to the US from foreign countries).
The problem is the US is held hostage by foreign corp tax rates when it allows corporations to set up shell companies in Ireland to take advantage of the tax rate there then ship to the US to avoid paying US tax rates (for those that don’t understand, companies like Apple book all their profit in Ireland at 10%. Then they make a huge markup on the product and ship to the US and sell for essentially the same price so they make no profit on shipping to the US to re-sell here and thus they avoid US corp tax rate. Drug companies doing the same).
There’s no effective way to disallow companies from opening foreign subsidiaries, so to offset the tax rate differential, you’d have to implement tariffs. You raise a valid point, but only 11% of federal revenue comes from corporate taxes. Better to get 10% of something than 20% of nothing. The question is how big the “something” is. I would guess it to be bigger than you would, but I am guessing.
Stryker Orthopedics moved production to Ireland 20 years ago.
According to every ad on YouTube, no one needs these diet drugs. You just need the “ pink salt trick”.
Mish’s dea for a disparate 10/20 internal/external corporate tax rate is an excellent one. Our current government – both Congress and President – cannot countenance good ideas.
Well, Merck would move their headquarters back to the US. Probably NYC. But that wouldn’t cause them to increase manufacturing in the US.
But we’d get the tax revenue.
Fat peeps tip the scales.
Funny!