Taoiseach Micheál Martin has warned that "we are not out of the woods yet" despite US President Donald Trump’s U-turn on tariffs.
It was described as a "moment of reprieve" by Tánaiste Simon Harris amid hopes that the EU’s decision to pause countermeasures could lead to negotiation with the US.
President Trump shocked the world and the stock market on Wednesday evening when he announced that he was putting a 90-day pause on his "Liberation Day" tariffs.
The 20 per cent tariff that was due to be placed on EU exports has now dropped to 10 per cent. The separate 25 per cent tariff on EU steel and aluminium is still in place.
However, European Commission President Ursula von der Leyen announced on Thursday that countermeasures on the steel and aluminium tariffs that had been agreed upon by the EU just hours before the Trump announcement had also been paused for 90 days.
Speaking at Dublin Castle at the Shared Ireland Forum on Thursday morning, the Taoiseach welcomed the pauses from both sides but warned that the battle is not over.
Mr Martin said: "We had been told at the outset that there would be a negotiating pathway, not to overreact. This is Europe, and indeed, ourselves in our bilateral exchanges and, indeed, talking to companies as well over the last number of weeks.
"There was a sense, although no clear pathway, but there was a sense that this would end up in some negotiating process.
"We hope that still remains the case because it's difficult to be definitive right now.
"I also do believe that the bond markets were influential and what happened on the bond markets clearly.
"Also you see on [Capitol] Hill, the legislature, people becoming more and more worried in terms of the impact on interest rates, mortgage interest rates and so on in America.
"All of those factors combined have accelerated the moment for negotiation.
"But we're not out of the woods yet. [There are] significant issues. The China-US economic conflict is very worrying.
"That has, on its own, the capacity to continue to dampen investment and lead to instability in the markets."
Mr Martin also said the Government is "conscious" that the 25 per cent tariff on steel and aluminium is still in place.
He added: "I'm not going to speculate on negotiations in public or anything like that.
"There is a sense that this is a watershed moment in terms of international trade."
When asked if there was any fear Trump would backtrack on his 90-day commitment, Mr Martin said, "The whole situation is somewhat uncertain."
The Tánaiste, meanwhile, returned to Dublin following his meeting with Commerce Secretary Howard Lutnick on Wednesday evening.
Mr Harris said the pause was a "moment of reprieve" and a "point we always thought was inevitable".
He said: "I very much gleaned from my engagements in Washington in the meeting with the Commerce Secretary a sense that we will now move into a period of negotiation.
"I think what remains to be seen is what's going to be covered by the scope of that negotiation.
"I hope we can see more detail in the coming days.
"But we should say this – Whilst we're in a better position today than we were yesterday in terms of now having this 90-day pause, in terms of not now seeing a differential on the island of Ireland in relation to tariffs, the global economic situation is still full of great volatility and great risk.
"We see this when you have two very large economies like the US and China involved in very high-level exchange of tariffs, and, indeed, when you see 10 per cent of an imposition on all EU goods and many goods across the world, that this is still not a good environment."
Mr Harris said that while he understands the desire to create more jobs and investment in the US, he pointed out to Secretary Lutnick that they could not "throw the baby out with the bath water here."
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