It would be "bizarre" for the US to implement new tariffs on the EU during ongoing negotiations, Tanaiste Simon Harris has said.
The Tanaiste’s comments came after US President Donald Trump reiterated a threat to impose tariffs on pharmaceuticals, which would have a significant impact on Irish exports.
Speaking in the Oval Office on Monday, Mr Trump said he would take the measure to improve domestic production of medicines.
He said the US does not make its own pharmaceuticals anymore and that the companies are based in Ireland, China and elsewhere.
To encourage the manufacturers to relocate back to the US, Mr Trump said: "All I have to do is impose a tariff."
The president added that companies would act faster if the tariff was more severe.
Asked for a timeline, Mr Trump said it would happen in the "not too distant future".
The EU is attempting to negotiate with the US during a 90-day suspension of sweeping 20 per cent tariffs imposed on exports from the bloc.
A lower baseline 10 per cent tariff remains in place but pharmaceuticals have, for now, been exempt.
However, the US has repeatedly signalled that it intends to target the pharmaceutical industry, which employs about 45,000 people in Ireland.
Total Irish exports were valued at €223.8 billion last year, with roughly one third going to the US.
Of the €72.6 billion in US imports from Ireland, approximately €58 billion relates to pharmaceuticals and chemicals leaving Ireland.
It had been suggested this could halve if Mr Trump had implemented a 20 per cent tariff on the goods and the EU had responded in kind.
CSO data published on Tuesday showed there was more than a five-fold increase in pharmaceutical exports to the US in February compared with the same month last year, up from €1.87 billion to €10.45 billion.
Exports to the US in general were up 210 per cent.
EY Ireland partner and chief economist Dr Loretta O’Sullivan said: "This bears all the hallmarks of a pre-emptive strike.
"The pharmaceutical sector was not alone in frontloading in February; the drinks industry also took steps to get ahead of policy shifts by the Trump administration, a smart move now that whiskey and other products have been hit with a 10 per cent tariff.
"Ireland’s significant trade linkages with the US mean businesses here are particularly exposed to transatlantic barriers, prompting them to get inventory into the American market as fast as possible."
Speaking to reporters before a Cabinet meeting in Dublin on Tuesday, Mr Harris called for "substantive engagement" to continue.
He said: "What I would say to our counterparts in the United States is the European Union is engaging in good faith. I’m sure the United States is as well.
"And in any good faith negotiation, you should never take any action to escalate the situation."
Mr Harris, who is also Irish foreign affairs and trade minister, added: "It would be bizarre and not good if, whilst in the middle of talks about trade, one of the parties to the talks was to do something that could cause economic damage or harm to the other.
"So I’d ask that calm measures, substantive engagement continues."
Also speaking to reporters on Tuesday, Taoiseach Micheal Martin said he expects "everything will be on the table" for talks with the US.
Asked how the EU should respond to American tariffs targeted at pharmaceuticals, he said: "We have to take it step by step.
"I mean, things are getting announced, things change on a weekly basis.
"The sensible thing to do is get this on to a negotiating pathway and to see what emerges from those negotiations."
Asked if he expects the US to pressure the EU to reduce trade and decouple with China, Mr Harris said the bloc is open to discussing "all issues" when it comes to trade but wants to prioritise the direct relationship between the two trading partners.
He told reporters: "The US does have very strong views in relation to China, and indeed that’s not a state secret.
"They’ve been very clear and very vocal about that at all levels of the administration, right up to the president of the United States.
"And the European Union also has some concerns in relation to China and trade and the need for any trade to be fair, the need for a level playing field, and the need for compliance with WTO rules.
"But we also have a perspective. We are the European Union, we’re not the United States of America, and we have every right to have our own perspective in relation to trade.
"So we’re happy to sit down in any negotiation, but we’d like to keep that negotiation on the basis of the relationship between the EU and the US, and how we can make that trading relationship even stronger."
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