The Government is hopeful the tariff threat to Big Pharma companies based here may have eased after what one minister described as Donald Trump's "flirtation with bankruptcy", writes John Drennan.

The US President last week warned time is running out for a deal under the 90-day tariff pause.

His hardline Commerce Secretary Howard Lutnick also threatened that sector-specific tariffs are on the way.

However, there is growing hope within the Government and across the EU that the damage Mr Trump's trade war is doing to the US economy - and his popularity ratings - have "softened his cough".

A Cabinet source said: "With the dollar decreasing, the bond market shake-up and inflation going way up in the US, even Trump realised there was no gain in [a trade] war.

"No-one seems to fully recognise how close America came to financial Armageddon in the initial days of Trump's trade war.

"The bond market, where the government borrows, was collapsing - it was [former British prime minister ] Liz Truss on speed. The markets were walking away from America. Mr Trump was in a flirtation with national bankruptcy."

The minister said the US, as the markets crashed, was "very close to the situation Ireland was in under [former Taoiseach Brian] Cowen when [our] economy collapsed. No-one, not even America, is too big to fail."

They added: "China was on the point of replacing America as the dominant world economic power. The American debt is unsustainable.

"A shock like tariffs would have sent them under. Huge companies like Apple would have gone under. All that has been priced in by the market - they were prepared to pull the trigger. That softened his cough."

The US President's tariff threats have sparked grave unease within the Coalition and across Europe.

One senior Government figure warned that tariffs on pharmaceutical multinationals based here - which accounted for €58bn of €78bn worth of exports to the US last year - would be akin to an "economic nuclear bomb".

But Coalition sources have been boosted by the united response of the EU to the US trade threats.

Finance Minister Paschal Donohoe this weekend stressed the need for a cautious approach.

He said: "It is so important we keep calm and measured in dealing with this trade risk."

Mr Donohoe downplayed Mr Trump's warnings about the 90-day tariff pause deadline, noting: "There is a long road ahead of us."

He said a united approach, "is the best option for Ireland and Europe".

"It's vital that we continue to engage with America in a measured and planned way. That's what the [EU] Commission is doing."

Another Coalition source also said Mr Trump's threat to slap swingeing tariffs on pharmaceutical companies would backfire.

They said: "Outside of the moral issue of using the sick in a trade war, attacking pharma would bring galloping medical inflation for Trump's core supporters.

"This would cause far greater riots than the price of eggs," they added in reference to what was a key issue in last November's US presidential election.